Where the Net Realisable Value of Inventory Falls Below Cost

question 2

Multiple Choice

Where the net realisable value of inventory falls below cost, IAS 2 Inventories, requires that:

• A) the inventory continue to be carried in the Statement of Financial Position at cost;
• B) the inventory be written down to net realisable value;
• C) no adjustment be made, but the difference between net realisable value and cost be disclosed in the notes to the financial statements;
• D) the difference be added to the carrying amount of the inventory.

---

Definitions:

Defensive Self-Esteem

A psychological condition where an individual's self-esteem is formed from defending oneself against criticisms, leading to fragile self-confidence.

Boast

To speak with excessive pride and self-satisfaction about one's achievements, possessions, or abilities.

Criticizes

The act of expressing disapproval or finding faults in something or someone, often with the intention of suggesting possible improvements.

Factor Analysis

A statistical method used to identify underlying variables, or factors, that explain the pattern of correlations among multiple observed measures.