Treatment for stock value where NRV of raw material is lower than cost but no effect on profit.

Question

the company has raw material whose NRV has gone below its but the company's profitibilty has had no effect.

Answer 1

If the NRV has gone below the cost, then the company should write down its inventory to NRV level and book the difference between cost and NRV amount as an expense. The company is also required to disclose the fact that it has written down its inventory value in notes to accounts.