If the selling price of inventories that has been written down to net realisable value in a prior period, subsequently recovers, the:
A) previous amount of the write-down can be reversed.
B) carrying amount of the inventories cannot be adjusted.
C) value adjustment can be recognised immediately in equity.
D) adjustment must be recognised in a 'provision for future inventories write-downs' account.

Question

Quizplus · Accepted Answer

The previous amount of the write-down can be reversed when the selling price of inventories that has been written down to net realisable value in a prior period subsequently recovers. This is because the amount of the write-down was recognized as an expense in the prior period, and reversing it in the current period would result in a decrease in expenses and an increase in net income.

If the Selling Price of Inventories That Has Been Written