FRA Inventory Write down question instead, company, question, following, understand

yuoska

Hi guys,
Here is the question I cannot understand. Here you go.
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The following information is avaiable about a manufacturing company:
Cost of ending inventory computed using FIFO,     4.3m
Net Realizable value                                                     4.1m
Current Replacement Cost                                          3.8 m
If the company is using IFRS, instead of GAAP, its COGS is most likely;
A. 0.3 lower
B. the same,
C. 0.3 higher.
My rationale is, carrying value  Net Realizable Value, so write down the original carrying value to Net realizable value, then COGS will not be affected.






ANS: C
Please help guys!
Thank you!

kim226

First, I’m pretty sure the answer is A.  Not C.
Second, write-downs on inventory are expensed as COGS.
Does that bridge the gap for you?