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Exhibit 5:

Century Chocolate Net Realisable Value Information for Black Licorice Jelly Beans

2018 2017
FIFO cost of inventory at 31 December (CHF) 314,890 374,870
Ending inventory at 31 December (Kilograms) 77,750 92,560
Cost per unit (CHF) 4.05 4.05
Net Realisable Value (CHF per Kilograms) 4.20 3.95


Ignoring any tax effect, the 2018 net realisable value reassessment for the black licorice jelly beans will most likely result in:

  1. an increase in gross profit of CHF 7,775.
  2. an increase in gross profit of CHF 11,670.
  3. no impact on cost of sales because under IFRS, write-downs cannot be reversed.

A is correct. Gross profit will most likely increase by CHF 7,775. The net realisable value has increased and now exceeds the cost. The write-down from 2017 can be reversed. The write-down in 2017 was 9,256 [92,560 × (4.05 – 3.95)]. IFRS require the reversal of any write-downs for a subsequent increase in value of inventory previously written down. The reversal is limited to the lower of the subsequent increase or the original write-down. Only 77,750 kilograms remain in inventory; the reversal is 77,750 × (4.05 – 3.95) = 7,775. The amount of any reversal of a write-down is recognised as a reduction in cost of sales. This reduction results in an increase in gross profit.

does every time we solve a reversal do we use the NPR from the previous year?