Following IFRS, Reversal of an Inventory Write-Down ________

question 93

Multiple Choice

Following IFRS, reversal of an inventory write-down ________.

• A) occurs when there is clear evidence of a decrease in net realizable value
• B) takes place when selling prices decrease following a write-down
• C) is limited to the amount of the original write-down
• D) will increase inventory but decrease reported income

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Definitions:

Net Operating Income

Income from operations after deducting operating expenses but before interest and taxes.

Operating Assets

Assets utilized in the daily operations of a business to generate revenue, such as equipment, machinery, and buildings.

Minimum Required Rate of Return

The lowest acceptable return on an investment, determined by the investor's objectives, risks, and opportunities.

Division's Margin

The difference between the sales generated by a division and its direct costs, used to evaluate the profitability of the division.