QBank Question for Inventory. Judah Inc. prepares its financial statements under IFRS. On December 31, 20X8, Judah has inventory of manufactured goods with a cost of $720,000. The estimated selling cost of that inventory is $50,000 and its market value is $740,000. By January 31, 20X9, none of the inventory has been sold but its market value has increased to $810,000. Selling costs remain the same. Which of the following entries is most likely permissible under IFRS? A) Write down inventory by $30,000 on December 31, 20X8 and write up inventory by $70,000 on January 31, 20X9. B) Write down inventory by $30,000 on December 31, 20X8 and write up inventory by $30,000 on January 31, 20X9. C) Make no adjustments to the valuation of inventory on either date. --------------------answer is B. So under IFRS, I understand we’re allowed to write-up if the mrkt value goes up for that asset. So for us to ‘write-up’ the correct amt will it be the SAME amt that we wrote-down? I don’t see where they write up $30K (?? How was that calculated???)
Under IFRS the company is allowed to do a write-up up to the amount of original cost. After the write-down the company had 690,000 in its books, so the write-up could be max. 30,000.
Net Realizable value = 740.0 - 50.0 = 690.0 NRV