as a manager at Dior, you face the tough challenge of having to report Q2 1994 earnings in the middle of pandemic crisis. An issue that keeps you busy is your inventories from the Spring / Summer collection that you could not sell because shops were closed but must sell soon because it is seasonal. - The respective inventories are currently recorded at 300 million in the balance sheet - Your plan is do dump these inventories on the market soon for 200 million - You have faced with the following numbers for Q2 and Q3 (200 million from dumping the collection) Q2: Sales 275 million and cost of sales 100 million Q3: Sales 200 million If you follow the rules strictly, you would need to take an impairment (affecting cost of sales), the question is what the "net realizable value" is: 1. How would the gross margins in Q2 and Q3 differ depending on whether you "Face the facts" (go with your expected "net realizable value" of 200 million) or if you took a "big bath" (go with a lower than expected "net realizable value" of 100 million). Which one do you prefer? 2. You have seen that other firms highlight in their earnings announcements that impairments are "non-cash": what does this mean and should you also say so when you report yours in Q2