The accounting for inventories is a major consideration for many entities because of its significance on both the statement of profit or loss (cost of goods sold) and the statement of financial position (inventories). Inventories are defined by IAS 2 as assets that are:

. . . held for sale in the ordinary course of business; in the process of production for such sale; or in the form of materials or supplies to be consumed in the production process or in the rendering of services.

This standard applies to all inventories, except:

  1. Financial instruments (IFRS 9, Financial Instruments); and
  2. Biological assets related to agricultural activity and agricultural produce at the point of harvest (IAS 41, Agriculture).

This standard does not apply to the measurement of inventories held by:

  1. Producers of agricultural ...

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