Although financial accounting allows write-downs of inventory to net realizable value, there is nothing comparable in the tax law.The tax law limits the write-down to replacement cost.

Question

Quizplus · Accepted Answer

The statement is incorrect. The tax law does allow write-downs of inventory to net realizable value, not just replacement cost. However, there are specific rules and limitations to how much and when inventory can be written down for tax purposes.

Although Financial Accounting Allows Write-Downs of Inventory to Net Realizable