The following information pertains to inventory held by a company at December 31, 2011. $$\begin{array} { | l | r | }
\hline \text { Historical cost } & \$ 25,000 \
\hline \text { Replacement cost } & \$ 20,000 \
\hline \text { Net realizable value } & \$ 21,000 \
\hline \text { Normal profit Margin } & 20 \% \
\hline
\end{array}$$
-What is the amount of inventory loss shown on the income statement under IFRS?

Question

The following information pertains to inventory held by a company at December 31, 2011. $$\begin{array} { | l | r | } 
\hline \text { Historical cost } & \$ 25,000 \
\hline \text { Replacement cost } & \$ 20,000 \
\hline \text { Net realizable value } & \$ 21,000 \
\hline \text { Normal profit Margin } & 20 \% \
\hline
\end{array}$$
-What is the amount of inventory loss shown on the income statement under IFRS?

Quizplus · Accepted Answer

Under IFRS, inventory is measured at the lower of cost and net realizable value. The historical cost is $25,000, and the net realizable value is $21,000. The inventory is written down to $21,000, resulting in a loss of $4,000.

The Following Information Pertains to Inventory Held by a Company