Mikrokosmos Co. prepared its annual financial statements on a calendar-year basis. In 2020, Mikrokosmos Co. experience an impairment in its inventory. Their inventories (which cost P1,320,000) only have a net realizable value of P1,100,000. As a matter of policy, they record any write-downs in inventory as part of “Loss on Inventory Writedown” (LIW) and uses an allowance account as a valuation account for inventory. During 2021, the same cost of inventories further went down to only 1,050,000 net realizable value. Which among the following best describes the journal entry for the impairment at year 2021?
A. A debit to LIW and credit to Allowance for Inventory Writedown, P170,000
B. A debit to Allowance for Inventory Writedown and credit to LIW, P50,000
C. A debit to Allowance for Inventory Writedown and credit to LIW, P170,000
D. A debit to LIW and credit to Allowance for Inventory Writedown, P50,000
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