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    Question

    Under Ind AS 2, when net realisable value (NRV) of

    inventory falls below cost, accounting treatment is:
    A Write down inventory to NRV and recognise loss in P&L Correct Answer Incorrect Answer
    B No change; always keep historical cost Correct Answer Incorrect Answer
    C Credit difference to revaluation reserve Correct Answer Incorrect Answer
    D Treat as deferred tax only Correct Answer Incorrect Answer

    Solution

    Inventories are measured at the lower of cost and Net Realisable Value (NRV). Any write-down to NRV is recognized as an expense in the period in which the write-down occurs.

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