IAS 2- INVENTORY

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1. Scope & definition
2
Inventories includes assets:
(a) held for sale in the ordinary course of business;
(b) in the process of production for such sale; or
(c) in the form of materials or supplies to be
consumed in the production process or in the
rendering of services.

LVNT-HTH
1. Scope & definition
3
Inventories excludes:
• Work in process arising under construction
contracts (IAS 11)

• Financial instruments (IFRS 9/IAS 39)

• Biological assets relating agriculture (IAS 41)

LVNT-HTH
2. Recognition & Measurement
Measurement: Amount?

Initially Subsequently
Cost Lower of cost or NRV(Net realizable value)
Costs of purchase +Cost
FIFO
of conversion + Other estimated selling price -
Weighted average cost
costs. estimated costs
Specific identification
Retail method
Standard cost
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4
 Measurement: cost of inventories
5
Cost of inventories
Costs of
Costs of purchase Other costs
conversion

fixed
purchase price direct costs
production
overheads
import duties indirect costs
(allocated production variable
other taxes
overheads) production
(non-refundable
overheads
in nature)

other direct
costs LVNT-HTH