CONCEPTUAL FRAMEWORK: A

Using the 5 W’s 1 H Fram

IAS 2 INVENTOR

WHO

Business Entity that

sell goods.

WHY

To prescribe the
accounting treatme
needed for inventor
and also to use as a g
to properly assign co
WHERE the inventories.

Economic Environment of
the entity.
 to properly assign co
the inventories.

Economic Environment of
the entity.

HOW

Inventories should be meas

at lower cost and net realiz
value.

*Cost of Inventories includ

•Cost of Purchase
• Cost of Conversion
• Other cost incurred in
bringing the inventories to
present location and condi

* Cost Measurement
Techniques
• Standard Cost- produce
large amount of small ite
• Retail Method- retailers
large amount turnover o
inventories with similar pr
margin.

Net Realizable Value- is t

value of an asset that can
realized upon the sale of
items.
Any write down to to ne
realizable value should b
recognized as expense in
period im which the write d
occurs.
 realized upon the sale of
items.
Any write down to to ne
realizable value should b
recognized as expense in
period im which the write d
occurs.
UAL FRAMEWORK: A CONCEPTUAL MAP
Using the 5 W’s 1 H Framework

IAS 2 INVENTORIES

WHAT

Inventories- are the assets that

are held for sale in the ordinary
course of business.

Determining how to measure

inventories.
WHY

To prescribe the
accounting treatment
needed for inventories
nd also to use as a guide
o properly assign cost to
the inventories. WHEN

Monthly, at least annually with

comparability.
o properly assign cost to
the inventories.

Monthly, at least annually with

comparability.

HOW

entories should be measured

lower cost and net realizable
value.

Cost of Inventories includes:

•Cost of Purchase
• Cost of Conversion
• Other cost incurred in
nging the inventories to their
esent location and condition.

* Cost Measurement
Techniques
Standard Cost- produces of
arge amount of small items.
Retail Method- retailers with
large amount turnover of
ventories with similar profit
margin.

Net Realizable Value- is the

alue of an asset that can be
ealized upon the sale of the
items.
Any write down to to net
realizable value should be
ecognized as expense in the
riod im which the write down
occurs.
ealized upon the sale of the
items.
Any write down to to net
realizable value should be
ecognized as expense in the
riod im which the write down
occurs.