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      Question

      A repair parts inventory for claim servicing includes

      slow-moving items. NRV has fallen for some SKUs, while others have long lead times. Can management offset NRV write-downs with expected price recoveries on fast-moving SKUs?
      A Yes, if within same warehouse Correct Answer Incorrect Answer
      B Yes, if same supplier Correct Answer Incorrect Answer
      C No, write-downs are item-specific or by homogeneous groups Correct Answer Incorrect Answer
      D Yes, because risks are pooled in insurance Correct Answer Incorrect Answer
      E No, inventory write-ups are prohibited in all cases Correct Answer Incorrect Answer

      Solution

      NRV is assessed item-wise or by similar items; offsetting with unrelated items isn’t allowed.

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