Where the net realisable value of inventories falls below cost, AASB 102 Inventories requires that:
A) inventories continue to be carried in the statement of financial position at cost.
B) inventories be written down to net realisable value.
C) no adjustment be made, but the difference between net realisable value and cost be disclosed in the notes to the financial statements.
D) the difference be added to the carrying amount of the inventories.

Question

Quizplus · Accepted Answer

AASB 102 requires that inventories be written down to their net realisable value when the value falls below cost. This ensures that inventory is reported at its reasonable and conservative value. Option A is incorrect, as inventories should not be carried at cost when their net realisable value is lower. Option C is incorrect, as a write-down is necessary. Option D is incorrect, as the difference should be subtracted from the carrying amount, not added to it.

Where the Net Realisable Value of Inventories Falls Below Cost