Question
BC company supplies parts to a major manufacturer for the production of Item I. The carrying amount of the inventory of parts at the end
BC company supplies parts to a major manufacturer for the production of Item I. The carrying amount of the inventory of parts at the end of the fiscal year 2000 is 2,000,000 euros which was considerably higher compared to the level of inventory of Item I in previous periods. During January 2021 the manufacturer terminated the production of Item I and started the production of Item II. The parts produced by ABC are not interchangeable between Item I and Item II. Moreover, Item I cannot be sold to another manufacturer.
Discuss whether ABC should write-down its inventory for the financial statements of 2020.
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