Materials and other supplies held for use in the production of inventories are not written
down below cost if the finished products in which they will be incorporated are
expected to be sold at or above cost. However, when a decline in the price of materials
indicates that the cost of the finished products will exceed net realisable value, the
materials are written down to net realisable value. In such circumstances, the
replacement cost of the materials may be the best available measure of their net
realisable value.