$4$

Under IAS $2,$ what adjustment needs to be made after an inventory write$-$down if the selling price subsequently increases?

$54$:$25$

Multiple Choice

No adjustment is necessary. Once inventory is written down, it cannot be increased under IASB standards.

It should be sold at the replacement cost.

The inventory write$-$down should be reversed to bring it in line with the new net realizable value or the historical cost, whichever is lower.

$$ Recovery of inventory loss should be debited to reflect the increase in inventory value.