under u s gaap no entry is recorded for the recovery because the write down is consi 615103

If Jane prepared financial reports using IFRS and the market price of rice rebounded in the next period from $1.20 to $1.50 per pound, $0.10 above the original $1.40 cost, she would record a recovery of $28 ([$1.40 — $1.20] X 140 lbs.) with the following adjusting journal entry. This entry would increase net income, but only to the extent of the recovery ($0.20), not the entire market price increase ($0.30).

Under U.S. GAAP, no entry is recorded for the recovery because the write-down is considered permanent.