O'Reilly logo

Wiley IFRS: Practical Implementation Guide and Workbook, 3rd Edition by Liesel Knorr, Graham Holt, Abbas A. Mirza

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 4
INVENTORIES (IAS 2)

BACKGROUND AND INTRODUCTION

The Standard prescribes the accounting treatment for inventories. The main issue with respect to accounting for inventory is the amount of cost to be recognized as an asset. In addition, the Standard provides guidance on the determination of the cost and subsequent recognition of expense (including write-down of inventory to its net realizable value). The Standard also provides guidance on the cost flow assumptions (“cost formulas”) that are to be used in assigning costs to inventories.

SCOPE

This Standard applies to all inventories other than
• Work in progress under construction contracts and directly related service contracts (IAS 11, Construction Contracts)
• Financial instruments
• Biological assets related to agricultural activity and agricultural produce at the point of harvest (under IAS 41, Agriculture)
This Standard does not apply to the measurement of inventories held by
• Producers of agriculture and forest products, agricultural produce after harvest, and minerals and minerals products, to the extent that they are measured at net realizable value in accordance with best practices within those industries. When such inventories are measured at net realizable value, changes in that value are recognized in the profit or loss in the period of change.
• Commodity brokers-traders who measure their inventories at fair value less cost to sell. When such inventories are measured at fair value less cost to sell, the ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required