Assume that there is a decline in inventory value in one period, then there is a reversal of value to the original or higher value and a later period. Which of the following statements about recognition of the loss is true?
A) The decline in inventory value and related loss should be recognized in the first period and reversed in the second period in all situations.
B) The decline in inventory value and related loss should be recognized in the first period and reversed in the second period but only if the second period is within the same fiscal year.
C) The decline in inventory value and related loss should be recognized in the first period and reversed in the second period but only if the second period is within a different fiscal year.
D) The decline in inventory value and related loss should never be recognized.
Correct Answer:
Verified
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