Question
On January 1, 2022, Roseland Company experienced a decline in the value of inventory resulting in write down from P8,000,000 cost to P7,000,000 net realizable
On January 1, 2022, Roseland Company experienced a decline in the value of inventory resulting in write down from P8,000,000 cost to P7,000,000 net realizable value. The entity used the allowance method to record the necessary adjustment. In 2022, market conditions have improved dramatically. On December 31, 2022, the inventory had a cost of P10,000,000 and net realizable value of P9,600,000. The entity made purchases of P40,000,000 in 2022.
1. How much is the gain on reversal of impairment?
a. 400,000
b. 600,000
c. 200,000
d. 0
2. What amount should be reported as cost of goods sold in 2022?
a. 38,000,000
b. 38,600,000
c. 37,400,000
d. 37,800,000
3. If the company is using direct write off method, what amount should be reported as cost of goods sold in 2021?
a. 38,000,000
b. 38,600,000
c. 37,400,000
d. 37,800,000
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