CFA Practice Question

There are 520 practice questions for this study session.

CFA Practice Question

Due to global oversupply in the micro-chip industry a company wrote down its 2013 inventory by $4.0 million from $12.0 million. The following year, due to a change in competitive forces in the industry, the market price of these chips rose sharply, to 10% above their original 2013 value. If the company prepares its financial statements in accordance with IFRS, its 2014 inventory (in $ millions) will most likely be reported as ______.
A. 9.0
B. 12.0
C. 13.0
Explanation: Although IFRS does require write-downs, it also allows revaluations, but these are not to exceed the original value (i.e., 12). The exception to this, where gains are allowed, is for producers of agricultural, forest, and resource products.

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