Wiley GAAP 2015: Interpretation and Application of Generally Accepted Accounting Principles 2015

Chapter 22ASC 330 INVENTORY

PERSPECTIVE AND ISSUES

   Subtopic

   Scope

   Practice Alert

   Overview

DEFINITIONS OF TERMS

CONCEPTS, RULES, AND EXAMPLES

   Ownership of Goods

   Accounting for Inventories

   Initial Measurement—Valuation of Inventories

   Lower of Cost or Market (LCM)

   Differences between GAAP and Income Tax Accounting for Inventories

   Other Inventory Topics

PERSPECTIVE AND ISSUES

Subtopic

ASC 330, Inventory, consists of one subtopic:

• ASC 330-10, Overall, that provides guidance on the accounting and reporting practices on inventory.

ASC 330, Inventory, discusses the definition, valuation, and classification of inventory, as well as the measurement and classification of inventories during interim periods.

Scope

ASC 330 applies to all entities but is not necessarily applicable to:

• Not-for-profit entities
• Regulated utilities.

(ASC 330-10-15-2 and 15-3)

Practice Alert

While SEC comments do not pertain to nonpublic entities, their comments can often provide valuable guidance. In the area of inventory, the SEC has commented on the selection and disclosure of valuation methods, how spoilage is estimated, cost capitalized in inventory, and disclosure of adjustments. Preparers should pay close attention to the accounting and disclosures in those areas.

Overview

The accounting for inventories is a major consideration for many entities because of its significance to both the income statement (cost of goods sold) and the statement of financial position (current ...