PAS 2
INVENTORIES
Inventories are assets
 held for sale in the ordinary course of
business, (-Finished Goods)
 in the process of production for sush
sale (-Work In Process) or
 in the form of materials or supplies to
be consumed in the production
process on in the rendering services
Raw Materials and manufacturing
supplies).
Cost of Inventories
1. Cost of Purchase - there’s no problem if it is
cash basis, but if it is on credit then recognize the
cash price equivalent (because the cash price
equivalent is the fair value of the inventories
acquired) , if the cash price equivalent is not given,
then use the present value
2. Directly Attributable Costs (DACs) - costs to
bring to management’s intention,
bring to intended location: e.g. freight in
Bring to intended condition e.g. for work-in-
process, manufactured goods - to bring the goods
that are still in process to finished goods category
or to completion.
Examples of Inventories:
1. Merchandise (finished goods)
2. Property being constructed for sale in
the ordinary course of business
3. Property acquired for redevelopment
and resale
4. Work-in-process goods
5. Processed meat
6. Harvested meat (since it is a process
in production) -
7. Agriculture produce - (although it is
Inventories but its measurement is PAS
41 at the point of harvest, because
agricultural produce is measured at fair
value less cost to sell, which is called
initial recognition)
8. Raw materials
9. Factory Supplies/Production Supplies
Not Examples of Inventories:
1. Non current asset acquired with a view to
subsequent disposal - PFRS 5
2. Harvested meat at the point of harvest as
an initial recognition- (agricultural produce)
PAS 41
3. All supplies that is not consumable e.g.
Office Supplies, Tools Supplies - Prepaid
Supplies