Zimt AG wrote down the value of its inventory in 2007 and reversed the write-down in 2008.

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Zimt AG wrote down the value of its inventory in 2007 and reversed the write-down in 2008. Compared to the results the company would have reported if the write-down had never occurred, Zimt’s reported 2008:

A. profit was overstated.

B. cash flow from operations was overstated.

C. year-end inventory balance was overstated.

Assume the companies use a periodic inventory system.

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International Financial Statement Analysis CFA Institute Investment Series

ISBN: 9780470287668

1st Edition

Authors: Thomas R. Robinson, Hennie Van Greuning CFA, Elaine Henry, Michael A. Broihahn, Sir David Tweedie

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Question Posted: Feb 14, 2024 09:01 AM

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Zimt AG wrote down the value of its inventory in 2007 and reversed the write-down in 2008.

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Step by Step Answer:

Firstly we need to understand the concepts of inventory writedown and reversal of writedown 1 Inventory WriteDown An inventory writedown is an account...View the full answer

International Financial Statement Analysis CFA Institute Investment Series

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