inventory write down

CFA Level II
#1

under IFRS: loss goes to I/S under U.S. GAAP: where does the write down go?

#2

I/S

#3

What about for inventory write ups? IFRS: Allows it I believe GAAP: Not allowed. Any gain from the sale of written down inventory is just realized when sold correct?

#4

Just studied this - you’re correct

#5

Chuck is right but I would add that under IFRS you can only write the inventory back up by the amt you wrote it down and it can not exceed original cost

#6

Cool. Thanks

#7

Double check: 1) Both IFRS and GAAP, for inventory writedown, inventory marked down, loss goes on to I/S. Correct? 2) IFRS allows for revaluation/writeup of inventory, but GAAP does not. Correct? Questions: 1) Does the above apply to fixed assets as well? Is the treatment same for inventory and fixed assets? 2) In writedown, we said loss goes on to I/S, but for writeups, does the gain go on to I/S?

#8

Dreary, 1) yes it does 2) in the case of fixed assets, remember that is asset initially goes up, then goes as reval on oci, if it goes down after then reverse oci balance up to amount of writedown the goes through i/s