Cryptocurrency Inventory — Write-Down to NRV (Market Price Fall)
Writing down cryptocurrency inventory to net realizable value when market price falls below the acquisition cost — the inventory model analogue to IAS 38 impairment, but reversible when prices recover.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cost of Sales — Crypto Inventory Write-Down to NRV | Expense (+) | 350,000.00 | - |
| Cryptocurrency Inventory (NRV Write-Down) | Asset (-) | - | 350,000.00 |
💡 Accountant's Note
Under IAS 2 for entities NOT using the broker-dealer fair value model, inventory is measured at the LOWER OF COST AND NRV. When market price falls below cost, inventory is written down to NRV. Unlike IAS 38 impairments (which are irreversible), IAS 2 NRV write-downs ARE REVERSIBLE — if the crypto price subsequently recovers above the previously written-down level, the reversal is recognised as a reduction of cost of sales (up to the original cost). This reversibility is a key advantage of the inventory model over the IAS 38 intangible asset cost model.
Practitioner & Systems Framework
💻 ERP Architecture
NRV write-downs for cryptocurrency inventory are assessed at each period-end by comparing the carrying cost to the closing market price less estimated selling costs (exchange fees). If the current price is below carrying cost, the write-down is posted. The write-down is reversed in a subsequent period if the NRV has recovered — the reversal is limited to the amount of the original write-down (carrying value cannot exceed original cost). Track the write-down history by lot to ensure reversal limits are enforced.
⚠️ Audit Flags
Auditors confirm NRV using current market prices at the reporting date from a named exchange. Test that reversals do not exceed the original write-down amount (IAS 2.33 cap). For inventory with multiple write-down layers (written down multiple times over multiple periods), the reversal cap must be tracked at the lot level. Assess whether the IAS 2 inventory treatment (reversible write-down) vs. the IAS 38 intangible treatment (irreversible impairment) has been correctly elected and consistently applied.
📄 Required Documentation
Market price at period-end (from named exchange), original cost basis by lot, NRV calculation (market price less selling costs), write-down calculation, prior period write-down history (for reversal cap assessment), reversal journal (if applicable), and IAS 2 vs. IAS 38 policy election documentation.
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