The following information pertains to inventory held by a company on December 31, 2011. $$\begin{array} { l r }
\text { Historical cost } & \$ 30,000 \
\text { Replacement cost } & \$ 20,000 \
\text { Net realizable value } & \$ 27,000 \
\text { Normal profit margin } & 20 \%
\end{array}$$
-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 on December 31, 2011. $$\begin{array} { l r } 
\text { Historical cost } & \$ 30,000 \
\text { Replacement cost } & \$ 20,000 \
\text { Net realizable value } & \$ 27,000 \
\text { Normal profit margin } & 20 \%
\end{array}$$
-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 $30,000, and the net realizable value is $27,000. The inventory is written down to $27,000, resulting in a loss of $3,000.

The Following Information Pertains to Inventory Held by a Company