International GAAP 2020

Chapter 22Inventories

• 1 INTRODUCTION
• 2 IAS 2: OBJECTIVE, SCOPE AND DEFINITIONS
  • 2.1 Objective
  • 2.2 Definitions
  • 2.3 Scope
    • 2.3.1 Practical application of the scope and recognition requirements of IAS 2
      • 2.3.1.A Core inventories and spare parts – IAS 2 or IAS 16
      • 2.3.1.B Broadcast rights – IAS 2 or IAS 38
      • 2.3.1.C Emission rights – IAS 2 or IAS 38
      • 2.3.1.D Bitcoin and other crypto-currencies
      • 2.3.1.E Transfers of rental assets to inventory
      • 2.3.1.F Consignment stock and sale and repurchase agreements
      • 2.3.1.G Sales with a right of return
• 3 MEASUREMENT
  • 3.1 What may be included in cost?
    • 3.1.1 Costs of purchase
    • 3.1.2 Costs of conversion
    • 3.1.3 Other costs
      • 3.1.3.A Storage and distribution costs
      • 3.1.3.B General and administrative overheads
      • 3.1.3.C Borrowing costs and purchases on deferred terms
      • 3.1.3.D Service providers
      • 3.1.3.E Forward contracts to purchase inventory
      • 3.1.3.F Drug production costs within the pharmaceutical industry
  • 3.2 Measurement of cost
    • 3.2.1 Cost formulas
      • 3.2.1.A First-in, first-out (FIFO)
      • 3.2.1.B Weighted average cost
      • 3.2.1.C Last-in, first-out (LIFO)
  • 3.3 Net realisable value
  • 3.4 Measurement of crypto-assets in scope of IAS 2
    • 3.4.1 Crypto-assets: Cost or lower net realisable value
    • 3.4.2 Crypto-assets: Fair value less costs to sell
• 4 REAL ESTATE INVENTORY
  • 4.1 Classification of real estate as inventory
  • 4.2 Costs of real estate inventory
    • 4.2.1 Allocation of costs to individual units in multi-unit developments
    • 4.2.2 Property demolition and lease costs