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CA Final · Financial Reporting · Ind AS 10 Events after the Reporting Period

Nair Exports Ltd. has a reporting date of 31 March 2026, and the Board approved the financial statements on 18 May 2026. Inventory of 1,000 units was carried at cost of Rs 500 per unit at 31 March 2026. On 30 April 2026 the entire lot was sold for Rs 450 per unit, with selling costs of Rs 10 per unit, and the price fall was due to conditions existing at 31 March 2026. What amount of write-down should be recognised in the year ended 31 March 2026?

The write-down is Rs 60,000. The post-period sale is evidence of net realisable value at the reporting date, which is Rs 440 per unit after selling costs of Rs 10. The cost of Rs 500 less Rs 440, multiplied by 1,000 units, gives Rs 60,000.

  1. ARs 50,000
  2. BRs 60,000Correct
  3. CRs 10,000
  4. DNil, because the sale occurred after the reporting period

Explanation

The sale after the reporting period gives evidence of net realisable value at the reporting date, so it is an adjusting event. NRV per unit is 450 - 10 = Rs 440, and the write-down is (500 - 440) x 1,000 = Rs 60,000. Rs 50,000 ignores the selling costs.

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