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      Question

      Under Ind AS 2, when net realisable value (NR

      • V 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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