CERTYNEX IFRS ACADEMY

Atelier Corbières measures its furniture inventory using the standard cost method. The standards have not been reviewed for three years; in the meantime, timber prices have risen by 25% on a lasting basis. At the reporting date, the furniture in inventory amounts to 410,000 at standard cost, whereas its estimated actual cost, under current normal conditions, is 520,000. What should the entity do?

Keep 410,000, because the standard cost method is expressly permitted by the standard, with no other condition.

Revise the standards so that the measurement approximates actual cost.

Keep the standards and merely mention the difference of 110,000 in the notes.

Measure the furniture at replacement cost at the reporting date, which replaces the outdated standard cost.