Leather is a primary material used by PT Juri for the manufacture of shoes. Leather inventory at 31 December 2021 had co

[answerhappygod]

Leather is a primary material used by PT Juri for the
manufacture of shoes. Leather inventory at 31 December 2021 had
cost Rp50 million to purchase, but only had a net realizable value
of Rp30 million. On the basis that PT Juri does not intend to
dispose of the leather, the inventory has been included in the
financial statements at a value Rp35 million. It is believed that
this partially reflects the fall in value of the leather, but also
takes account of the intention to retain the inventory for use in
the production process. It is expected that the finished shoes,
into which the leather will be incorporated, can be sold at
reasonable profit margin.
Required:
1. Advice correct accounting treatment of the leather inventory
of the company at 31 December 2021. Explain.
2. Provide relevant journal entries.