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- 2011-7-11
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- 2013-10-18
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Inventory Writedowns -- reversing
Hi again everybody,
I have a query re: inventory writedowns. Let’s say, for a company following IFRS:
Year 1: ending inventory = 100 units, cost = $10 each, NRV = $9 each from $10 the previous year. Company takes a writedown of $100.
Year 2: ending inventory = 50 units, cost = $10 each, NRV = $11 each.
Obviously the company is allowed to reverse the writedown. My question is: seeing as ending inventory is now halved from Year 1, can it reverse the whole writedown, or only part? I would have assumed part of it, because essentially you have only 50 units that have increased in value, whereas in Year 1 you had 100 units that dropped in value.
But question 24 in the inventories chapter of CFA book seems to suggest you reverse the whole amount. Does anyone have any thoughts/explanations on this?
Thanks very much. |
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发表于 2011-7-13 16:29
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