Shake Company's Inventory Experienced a Decline in Value Necessitating a Write-Down

question 49

Multiple Choice

Shake Company's inventory experienced a decline in value necessitating a write-down to lower of cost or net realizable value (LCNRV) of €230,000. This amount is material to Shake's income statement and the company follows IFRS. Where should Shake Company report this decline in value according to IFRS?
I. As a loss on the income statement.
II. As a separate component of other comprehensive income on the statement of comprehensive income.
III. As part of cost of goods sold on the income statement.

• A) Shake must use I.
• B) Shake must use I, II or III.
• C) Shake must use I, or III.
• D) Shake must use III.

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Definitions:

Communications

The process of exchanging information, ideas, and feelings through verbal or non-verbal means.

Leader and Members

The dynamic relationship between the individual guiding or directing a group and those following within the group hierarchy.

Psychoanalytic

Relating to a theory and therapeutic method developed by Sigmund Freud that emphasizes unconscious mental processes and early childhood experiences in shaping behavior.

Cognitive-behavior Therapist

A mental health professional specializing in cognitive-behavioral therapy, which focuses on changing negative thoughts and behaviors to improve emotional regulation and develop personal coping strategies.