Under US GAAP, are write-downs to NRV reversible?

• A. No
• B. Yes, when NRV recovers
• C. Only for large inventories
• D. Only if the company provides disclosure

Answer: (A)

Under US GAAP, write-downs of inventory to net realizable value are permanent. When cost exceeds NRV, you lower the carrying amount to NRV, and that impairment is not reversed if NRV later increases. The carrying value stays at the lower of cost and NRV, even if market conditions improve. This contrasts with IFRS, which allows reversals of prior impairment if NRV recovers. The other options aren’t correct because a recovery in NRV does not trigger a reversal under US GAAP, there isn’t a size-based exception, and merely disclosing information doesn’t restore a previously written-down amount.