IAS 2Chapter 6Lesson 2
Reassessing net realisable value and reversing a write-down
Step 1 of 9Learning objectives
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An inventory write-down is not final: net realisable value is reassessed at each reporting date. If it rises for an item still held, the write-down is reversed, never beyond its original amount nor above the item's cost, and the reversal reduces the amount of inventories recognised as an expense in the period.
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Learning objectives
- Explain why net realisable value is reassessed every period and in which circumstances a write-down is reversed.
- Calculate the new carrying amount (lower of cost and revised net realisable value) and the amount of the reversal, capped at the original write-down.
- Distinguish a reversal from an additional write-down and deal correctly with units sold between two reporting dates.
- Record the reversal as a reduction in the amount of inventories recognised as an expense.