How should a decline in the market price of inventory below cost during an interim period be accounted for if near-term price recovery is uncertain? EITF DISCUSSION The Task Force reached a consensus that Opinion 28 requires that the inventory be written down to the lower of cost or market unless (1) substantial evidence exists that market prices will recover before the inventory is sold or (2) in the case of last-in, first-out (LIFO) inventory, that inventory amounts will be restored by year-end. Task Force members pointed out that a writedown is generally required unless the decline is due to seasonal price fluctuations. STATUS No further EITF discussion is planned
To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.