Inventory That Originally Cost $100 Had Been Written Down to Its

question 10

True/False

Inventory that originally cost $100 had been written down to its net realizable value (NRV) of $75.Subsequently, the NRV of the inventory recovered to equal its cost of $100.In this situation, the amount of the $25 ($100 - $75) prior writedown in value should be reversed.

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Definitions:

Total Manufacturing Costs

The aggregate of expenses related to producing goods, including raw materials, labor, and overhead costs.

Work in Process Inventory

Products that are in the manufacturing process but are not yet complete, considered a current asset on the balance sheet.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting overheads, taxes, and interest payments.

Operating Expenses

Costs related to the day-to-day functions of a business outside of direct production costs, such as rent, salaries, and utilities.