Answer:
Dr Supplies Impairment Expense $7980
Cr Supplies Inventory $7980
Explanation:
According to IAS 2 Inventories, the impairment in the inventory values must be reflected as an expense and must be accounted for.
IAS 2 also says that the inventory must be recorded at lower of:
- Cost $9690
- Net Realizable Value $1710
This meas that writing down this inventory would require an adjusting entry of:
$9690 - $1710 = $7980
Impairment is debited with this amount and inventroy must be credited to reduce its value by $7980.
Dr Supplies Impairment Expense $7980
Cr Supplies Inventory $7980
