Question

At the end of year 1, a company reduced its inventory cost from $100 to its net realizable value of $80. As of the end of year 2, the inventory was still on hand and its net realizable value increased to $150. Under IFRS, what journal entry should the company record for year 2 to properly report the inventory value

Answer 1

Answer and Explanation:

According to the given situation, the Journal entry is shown below:-

Inventory Dr, $20 ($100 - $80)

To Expense $20

(Being inventory for year 2 is recorded)

Here we debited the inventory as it increased the assets and we credited the expenses as it decreased the expenses so that the proper posting could be done