A company which prepares its financial statements

Ans:B.
Under IFRS, inventory is reported on the balance sheet at the lower cost or net realizable value.Net realizable value is equal to the expected sales price less the estimated selling costs and completion costs.If net realizable value is less than the balance sheet value f inventory, the inventory is “write down” to net realizable value and the loss is recognized in the income statement.Is there is a subsequent recovery in value, the inventory can be “write up” and the gain is recognized in the income statement by reducing COGS by the amount of the recovery.Because inventory is valued at the lower of cost or net realizable value, inventory cannot be written up by more than it was previously written down.
In this question, the recovery of previous write-down is limited to the amount of the original write-down (€20,000) and is reported as a decrease in the cost of sales.