Problem
ABC company supplies parts to a major manufacturer for the production of Item I. The carrying amount of the inventory of parts at the end of the fiscal year 2020 is €2,000,000, which was considerably higher compared to the level of inventory of Item I in previous periods. During January 2021 the manufacturer terminated the production of Item I and started the production of Item II. The parts produced by ABC are not interchangeable between Item I and Item II. Moreover, Item I cannot be sold to another manufacturer.
Task
Discuss whether ABC should write down its inventory for the financial statements of 2020.