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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