● Manufacturing Business:

Finished Goods, Beg. xx

INVENTORIES (PAS 2)
According to IAS 2, paragraph 6, inventories are assets of
an enterprise, which are:
a. Held for sale in the ordinary course of business
b. In the process of production for such sales; or
c. In the form of materials or supplies to be consumed in the
production process or in the rendering of services.
● For manufacturing:
- Finished Goods
- Goods in Process (Work in Process)
- Raw Materials
- Factory of Manufacturing Supplies
● For merchandising:
- Merchandise Inventory or simply Inventory
● For service provider businesses:
- Work in process
ADD: Cost of Goods Manufactured xx
Cost of Goods Avail. For Sale xx
LESS: Finished Goods, Ending (xx)
Cost of Goods Sold xx
COST OF INVENTORY
1. Cost of purchase – Includes purchase price, import duties
and other taxes (except those which are recoverable from
tax authorities), and transport, handling and other costs
directly attributable to the acquisition of finished goods,
materials and services. Net of trade discounts, rebates and
other similar items.
● Cost of Conversion – Includes direct labor,
allocation of fixed and variable production
overhead.
● Allocation of fixed production overhead:
based on normal capacity
- Normal capacity is the production
expected to be achieved on average
over a number of periods or seasons
under normal circumstances taking into
account the loss of capacity resulting
from planned maintenance
- Unallocated fixed overhead is expensed
outright
● Allocation of variable production overhead is
allocated based on actual use
2. Cost of Agricultural Produce Harvested from
Biological Assets
3. Other Costs – Includes costs that incurred in bringing the
inventories to their present location and condition.
4. Costs of inventories of service providers – labor and
other costs of personnel directly engaged in providing the
service, including supervisory personnel and attributable
overhead cost excluding any profit margins and
non-attributable overhead.

Exclusions from Cost of Inventory

● Abnormal amounts of wasted materials, labor, or other
production costs
● Storage costs (unless essentials to the production process)
● Administrative overheads unrelated to production
● Selling costs
COST FLOW SUMMARY IN THE INVENTORY SYSTEM
● Labor and other costs relating to sales and general
administrative personnel
● Profit margins or non-attributable overheads that are often
factored into prices charged by service providers
● Financing element involved in purchases under deferred
payment arrangement. Borrowing costs are capitalized as
inventory costs when inventories qualify as discrete
projects of the enterprise and take a substantial period of
time for their production or development.

Trade and Cash Discounts - purchases of goods is recorded net of

COMPUTATION OF COST OF GOODS SOLD
● Service Provider: - NO COGS
● Merchandising Business:
Beginning Inventory
ADD: Purchases
Cost of Goods Avail. For Sale xx
LESS: Ending Inventory
Cost of Goods Sold
trade discounts while cash discounts may be accounted for using
one of the following methods: The gross price method, net price
method and allowance method
xx
Other Costs - are included in the cost of inventories only to the
xx
extent that they are incurred in bringing the inventories to their
present location and condition. Examples of other costs:
(xx)
● Borrowing costs – PAS 23 Borrowing costs requires
xx
capitalizing interest on inventories that take a substantial
 amount of time to create. However, an entity should not
capitalize borrowing costs for inventories that are
manufactured in large quantities on a repetitive basis.
● Storage costs – this can be included for products that
require a maturation process or substantial amount of time
to create.
● Non-production overheads or costs of designing
products for specific customers – this can be included in
cost if they contribute in bringing the inventories to their
present condition and location.
ITEMS TO BE INCLUDED IN INVENTORY QUANTITIES
As a rule, all goods to which the entity has title shall be
included in the inventory, regardless of location. The phrase
“passing of title” is a legal language which means “the point of time
at which ownership changes.”
Legal Test - Is the entity the owner of the goods to be inventoried?
If the answer is in the affirmative, the goods shall be included in the
inventory, otherwise, shall not be included.
Applying the legal test, the following items are included in the
inventory:
● Goods owned and on hand
● Goods in transit and purchased FOB shipping point
● Goods out on consignment
● Goods in the hands of salesmen or agents
● Goods held by customers on approval or on trial
Items that may require special attention in determining the
proper inventory items at the end of the period
GOODS IN TRANSIT
The terms of the shipment determine whether the seller of
the buyer includes them in its inventory.
The terms “FOB destination” and “FOB shipping point”
determine ownership of the goods in transit and the party who is
supposed to pay the freight charge and other expenses from the
point of shipment to the point of destination.
Who paid the freight charge?
● Freight Collect – this means that the freight charge on the
goods shipped is not yet paid. The common carrier shall
collect the same from the buyer. Thus, under this, the
freight charge is actually paid by the buyer.
● Freight Prepaid – this means that the freight charge on
the goods shipped is already paid by the seller.
● FAS or free alongside - A seller who ships FAS must
bear all expenses and risk involved in delivering the goods
to the dock next to or alongside the vessel on which the
goods are to be shipped. The buyer bears the cost of
loading and shipment and transfer of title happens when
the carrier takes possession of the goods. Similar to FOB
shipping point
● CIF or Cost, Insurance, and freight - the buyer agrees
to pay in lump-sum the cost, insurance, and freight of the
goods. The seller bears the cost of loading however title
transfers to the buyer upon delivery of goods to the
carrier.. Similar to FOB shipping point
● Ex-ship - Seller bears all expenses and risk of loss until
goods are unloaded . Similar to FOB destination
NOTE: F.O.B Shipping Point is also called FOB Seller ; F.O.B
destination is also called FOB Buyer
CONSIGNED GOODS
Goods may be transferred from one party (consignor) to
another (consignee) for the purpose of sale without the ownership
and ultimate economic control changing hands. The consignor
includes goods out on consignment in its inventory at cost plus the
handling and shipping costs incurred in the delivery of the goods to
the consignee while the consignee excludes goods held on
consignment in its inventory.
SEGREGATED GOODS
Special order goods manufactured according to the
customer specifications are considered as sold and therefore
excluded from the seller’s inventory. However, goods that are
customarily manufactured and constitute stock items of the
enterprise, even if physically segregated, are considered unsold,
until they are actually delivered or picked up by the customers.
CONDITIONAL SALES AND INSTALLMENT SALES
Under the installment contract the substance of the
transaction is that control over the goods has already passed to the
buyer. Goods in the hands of salespersons and agents, goods held
by customers on approval and goods held by others for storage,
processing or shipment, should also be shown as part of the ending
inventory of the enterprise that economically controls the goods.
GOODS SOLD WITH BUYBACK AGREEMENT
The customer does not obtain control of the asset (the
inventory), and the transferor shall account for the transfer as a
financing arrangement and shall retain the inventory in its books.
GOODS SOLD WITH REFUND OFFERS
The recognition of revenue implies that the corresponding
transferred goods be removed from the inventory at their carrying
amount.
LAY AWAY PLANS AND BILL AND HOLD SALES
Under these circumstances, revenue is recognized when
the customer obtains control over the product, that is when the
following conditions have been met:
a. The product must have been identified separately as
already belonging to the customer
b. The product must be ready for transfer to the customer
c. The entity does not have ability to use the product or to
direct it to another customer
NOTE: The recognition of revenue is made simultaneously to
derecognition of inventory in the seller’s accounting records.
Illustrative Example 1: Items to be included in Inventory
You have been assigned to compute for the correct balance
of the inventory account for the year ended December 31, 2019:

Illustrative Example 4: Items to be included in Inventory

You have been assigned to compute for the correct balance
of the inventory account for the year ended December 31, 2019:

Illustrative Example 2: Items to be included in Inventory

Identify the cost as either inventoriable or not, and
determine the amount to be included as part of inventory:

Answer: 5,979,000
INVENTORY ACCOUNTING SYSTEM Initial Measurement:

Illustrative Problem: Cash Discounts & Purchase Returns

AP Company entered into the following transactions
during the year:
● On November 2, it purchased inventory amounting to
P86,000 with terms of 3/10, n/30 from Rex Company.
● On November 4, it purchased inventory with a list price of
P150,000 with terms of 20%, 10%, 2/10, n/30 from Rhad
Company.
● On November 6, it returned merchandise with invoice cost
of P10,000 to Rex Company
● On November 12, it paid accounts to Rex Company
● On November 22, it paid accounts to Rhad Company.

Required: Prepare the necessary journal entries, assuming the

company is using the (a) Gross Method and (b) Net Method.

Solution: Period System (Perpetual System)

CASH DISCOUNTS ON INVENTORY PURCHASES ON

ACCOUNT

● Gross Method - If the entity adopts the Periodic

Inventory System, the Purchases account and the
Accounts payable account are recorded at the gross
invoice price while under the Perpetual Inventory System,
the Merchandise Inventory and the Accounts payable
accounts are recorded at gross.
A cash discount taken is recognized only at the
time of payment as a credit to Purchase Discount under
Periodic Inventory System and a credit to Merchandise
Inventory account if the Perpetual Inventory System was
used. Purchase Discount account is presented in the profit
or loss section as a deduction to Purchases account under
Periodic Inventory System.

● Net Method - If the entity adopts the Periodic Inventory

System, the Purchases and the Accounts payable account
are recorded at net of the cash discount while under
Perpetual Inventory System, the Merchandise Inventory FREIGHT CHARGES
and the Accounts payable accounts are recorded at net of
cash discount.
The Purchase discount is recognized, even not
taken. Under the Periodic Inventory System, If payment is
done after the discount period, a Purchase discount loss is
recognized, which is taken to the profit or loss section of
the Statement of Comprehensive Income as part of finance
cost and not capitalized to the inventory account.
Illustrative Problem:
On June 1, 2018, Angelica sold merchandise with a list
price of ₱5,000,000 to Ash. Angelica allowed trade discounts of
20% and 10%. Credit terms were 5/10, n/30 and the sale was made
at FOB shipping point. Angelica prepaid ₱200,000 of delivery cost
for Ash as an accommodation.
Required: Using the data above, answer the following:
1. What amount shall be initially recognized as Purchases
assuming Ash records purchases under the following
methods:
- Gross method
- Net method
2. How much will be remitted by Ash to Angelica if
payments are made under the following independent
situations:
- June 11, 2018
- June 16, 2018
Solution:
Journal entries on the part of Ash to compute for net remittance (if
payment is made on June 11, 2018): Periodic system (Perpetual
system)
INVENTORY COST FLOW
● A primary issue in accounting for inventories is the
determination of the amount to be recognized as an asset
and as an expense.
● The cost of goods available for sale is allocated between
the cost of goods sold and the ending inventory by means
of a cost flow assumption.
First in first out method (FIFO)
First come, first sold.The FIFO method assumes that “the
goods first purchased are first sold” and consequently the goods
remaining in the inventory at the end of the period are those most
recently purchased or produced. In other words, the FIFO is in
accordance with the ordinary merchandising procedure that the
goods are sold in the order they are purchased.
Weighted average perpetual method (Moving average method)
PAS 2, paragraph 27, provides that the weighted average
may be calculated on the periodic basis or as each additional
shipment is received depending upon the circumstances of the
entity.
Under this method, a new weighted average unit cost must
be computed after every purchase and purchase return. Thus, the
total cost of goods available after every purchase and purchase
return is divided by the total units available for sale at this time to
get a new weighted average unit cost.
Such new weighted average unit cost is then multiplied by
the units on hand to get the inventory cost.
This method requires the keeping of inventory stock cards in order
to monitor the “moving” unit cost after every purchase.
Weighted average periodic method
The cost of the beginning inventory plus the total cost of
purchases during the period is divided by the total units purchased
plus those in the beginning inventory to get a weighted average unit
cost. Such weighted average unit cost is then multiplied by the units
on hand to derive the inventory value. In other words, the average
unit cost is computed by dividing the total cost of goods available
for sale by the total number of units available for sale.
Specific Identification
Specific identification means that specific costs are
attributed to identified items of inventory.
The cost of the inventory is determined by simply
multiplying the units on hand by their actual unit cost.
This requires records which will clearly determine the
actual costs of goods on hand.
PAS 2, paragraph 23, provides that this method is
appropriate for inventories that are segregated for a specific project
and inventories that are not ordinarily interchangeable.
The specific identification method may be used in either
periodic or perpetual inventory systems.
The major argument for this method is that the flow of the
inventory cost corresponds with the actual physical flow of goods.
With specific identification, there is an actual
determination of cost of units sold and on hand. The major
argument against this method is that it is very costly to implement
even with high-speed computers.
Illustrative Example: Cost Formulas
The Sonny Company sells blankets for P30 each. The
following was taken from the inventory records during July:
Required: Determine the cost for sales and cost of ending
inventory under each the following independent assumptions:
● FIFO Method (periodic)
● FIFO Method (perpetual)
● Weighted-Average Method
● Moving Average Method

Standard cost - Predetermined product costs established on the

basis of normal levels of materials, supplies, and labor, efficiency,
and capacity utilization May be used for convenience if the results
approximate cost

Relative Sales Price Method - When different commodities are

purchased lump-sum, the single cost is apportioned among the
commodities based on their respective sales price. Based on the
philosophy that cost is proportionate to selling price

For example, products A, B, and C are purchased at basket

price of 3,000,000. The products have the following sales price:
500,000 for A ; 1,500,000 for B ; 3,000,000 for C.

The cost of each product is as follows:

Product A 500,000 5/50 x 3M 300,000

Product B 1,500,000 15/50 x 3M 900,000
Product C 3,000,000 30/50 x 3M 1,800,000
5,000,000 3,000,000

INVENTORY: Estimation Methods

INVENTORY ESTIMATION METHODS

In many cases, it is necessary to know the approximate
value of inventory when it is not possible to take a physical count.
Even if the physical count is possible. The same may prove costly,
difficult or inconvenient at the moment. The most common reasons
for making an estimate of the cost of the goods in hand are:
a. The inventory is destroyed by fire and other catastrophe,
or theft of the merchandise has occurred and the amount
of inventory is required for insurance purposes.
b. A physical count of the goods on hand is made and it is
necessary to prove the correctness or reasonableness of
such count by making an estimate.
- This is known as the “gross profit test” in the
accounting parlance.
c. Interim financial statements are prepared and a physical
count of the goods on hand is not necessary because it
may take time to do the same.
- Moreover, only an estimate is required to fairly
present the financial position and financial
performance of the entity for interim reporting
purposes.

Two common methods of estimating cost of inventory:

● Gross Profit Method
● Retail Inventory Method
GROSS PROFIT METHOD
● The gross profit method of estimating inventory costs is
based on an assumed relationship between gross profit and
sales or between gross profit and cost of sales.
● The gross profit method depends on the accuracy of the
gross profit percentage.

● The amount obtained is reported as ending inventory for

interim financial reporting purposes or is considered the
amount of loss in cases of fire, flood, theft, and similar
events unless there are undamaged or partially damaged
merchandise.
● In computing net sales only Sales return is deducted.
● Sales allowance and sales discount are ignored, that is, not
deducted from sales.
● The reason is that while these items decrease the amount
of sales, they do not affect the physical volume of goods
sold.
● Sales allowance and sales discount do not increase the Illustrative Example 2: Gross Profit Method (When there is
physical inventory of goods, unlike in sales return where undamaged or partially damaged merchandise)
there is an actual addition to goods on hand. On October 30, 2019, a big fire caused severe damage to
● However, in some exceptional cases, when sales discounts the warehouse of Jisoo Company. Thus, the company suffered a
are significant and the company anticipates these loss on its inventory. The following information was available from
discounts in setting sales prices, sales discounts may be the company’s books.
considered.

● The cost of undamaged merchandise to be deducted must

be lower of cost and Net Realizable value
● The gross profit method of inventory estimating inventory
is not allowed for annual external financial reporting
purposes.

Illustrative Problem 1: Gross Profit Method

Assume the following figures for Jisoo Company for the
six months ended June 30,2019:
 e. Sales discounts and sales allowances are not deducted
from retail sales.
f. Departmental transfer-in (debit) is an addition to both cost
and retail amount of purchases.
g. Departmental transfer-out (credit) is a deduction from
both cost and retail amounts of purchases.
h. Normal losses, shortage, shrinkage are deducted from the
goods available for sale at retail, after computing the cost
ratio.
i. Abnormal losses are deducted from both cost and retail
amounts of purchases, before computing the cost ratio.
j. Discounts to employees and favored customers are
deducted from the goods available for sale at retail, after
computing the cost ratio (in effect, this is an addition to
sales).

The original selling prices of goods may be modified as a result

Illustrative Example 3: Gross Profit Method (With sales of some market and economic forces, thus the following terms:
allowance and sales discount) 1. Original terms – the first selling price at which goods are
The following data are gathered for the current year: offered for sale.
2. Markup or additional markup – an increase in the
Inventory, beginning 600,000 selling price over the original retail price.
Purchases 2,530,000 3. Markdown – decrease in the selling price below the
Purchase return 15,000 original retail price.
Purchase allowance 5,000 4. Markup cancellation – a decrease in the selling price
Purchase discount 10,000 which does not bring the new selling price below the
Freight in 50,000 original retail.
Sales 3,100,000 5. Markdown cancellation – an increase in the selling price
Sales return 100,000 which does not bring the new selling price above the
Sales allowance 50,000 original retail price.
Sales discount 150,000 6. Net Markup – markup less markup cancellation.
7. Net Markdown – markdown less markdown cancellation.
Compute for the ending inventory under the following assumptions: 8. Maintained markup – difference between cost and sales
● Gross profit of 25% on sales after adjustment for all of the above items
● Gross profit of 25% on cost
RETAIL INVENTORY METHOD
● PAS 2, paragraph 22, provides that this method is often Approaches in the use of retail method
used in the retail industry for measuring inventory of large ● Conservative or conventional or lower of cost and NRV
number of rapidly changing items with similar margin for ● Average Cost Approach
which it is impracticable to use other costing method. ● FIFO approach
● The cost of the inventory is determined by reducing the
sales value of the inventory by the appropriate percentage
gross margin. EXAMPLE PROBLEM:
● The retail inventory method requires the maintenance of Assume the following information in relation to a
records of purchases at both cost and selling price. A ratio company’s retail inventory accounting system:
of cost of retail is calculated and applied to the ending
inventory at retail to compute the approximate cost.

Information Required:
a. Beginning inventory at cost and retail price
b. Purchases during the period at cost and at a retail price
c. Adjustments to the original retail price such as additional
markup, markup cancelation, markdown, and markdown
cancelation
d. Other adjustments such as departmental transfer,
breakage, shrinkage, theft, damaged goods, and employee
discount

Appropriate treatment for freight, discounts, returns and

allowances, and other relevant items are:
a. Freight-in is an addition to purchases at cost.
b. Purchase discounts and purchase allowances are
deductions from purchases at cost only.
c. Purchase returns are deducted from the cost and retail
amounts of purchases.
d. Sales returns are deducted from retail sales.
 Retail Inventory Method (Conservative)
Compute for the ending inventory and COGS assuming:
1. Average cost approach
2. Conservative approach
3. FIFO retail approach

Retail Inventory Method (Average Cost)

Retail Inventory Method (FIFO)

 ● In such circumstances, the replacement cost of materials
may be the best evidence of net realizable value.

Illustrative Example 1: To illustrate the lower of cost and net

realizable value
Assume the following information for different inventory
items held by Song Hye Kyo (SHK) Company at December 31,
2019:

INVENTORY:
Measurement of Inventories Initial-Subsequent Recognition

PAS 2, paragraph 9, provides that inventories shall be

measured at the lower of cost and net realizable value which
measurement is now known as LCNRV.

NET REALIZABLE VALUE

Net realizable value or NRV is the estimated selling price
in the ordinary course of business less the estimated cost of
completion and the estimated cost of disposal.
The cost of inventories may not be recoverable under the
following circumstances:
● The inventories are damaged.
● The inventories have become wholly or partially obsolete.
● The selling price have declined. ACCOUNTING FOR INVENTORY WRITE-DOWN
● The estimated cost of completion or the estimated cost of ● If the cost is lower than net realizable value, there is no
disposal has increased. accounting problem because the inventory is measured at
The practice of writing inventories down below cost to net cost and the increase in value is not recognized.
realizable value is consistent with the view that assets shall not be ● If the net realizable value is lower than cost, the inventory
carried in excess of amounts expected to be realized from their sale is measured at net realizable value and the decrease in
or use. value is recognized.
● The amount of any write-down of inventories to net
Determination of NRV realizable value should be recognized as an expense in the
● Inventories are usually written down to net realizable period the write down occurs.
value on an item by item or individual basis. ● The write down of inventory cost to lower of cost and net
● It is not appropriate to write down inventories based on a realizable value may be recorded using direct method or
classification of inventory, for example, finished goods or allowance method
all inventories in a particular industry or geographical
segment.
● In some circumstances, however, it may be appropriate to Direct Method
group similar or related items. ● The inventory is recorded at the lower of cost or net
● This may be the case with items of inventory relating to realizable value. This method is also known as “cost of
the same product line that have similar purposes, are goods sold method” because any loss on inventory write
produced and marketed in the same geographical area and down or gain on reversal of inventory writedown is not
cannot be practically evaluated separately. accounted for separately but buried in the cost of goods
● Materials held for use in production are not written down sold.
below cost if the finished products in which they will be
incorporated are expected to be sold at or above cost.
● However, when a decline in the price of material indicates
that the cost of the finished products exceeds net
realizable value, the materials are written down to NRV.
Allowance Method
● The inventory is recorded at cost and any loss on
inventory writedown is accounted for separately.
● This method is also known as “loss method” because a
loss account “loss on inventory writedown” is debited and
a valuation account “allowance for inventory writedown”
is credited.
● In subsequent years, this allowance account is adjusted
upward or downward depending on the difference
between the cost and net realizable value of the inventory
at year-end.
● If the required allowance increases, an additional loss is
recognized.
● If the required allowance decreases, a gain on reversal of
inventory writedown is recorded.
● However, the gain is limited only to the extent of the Illustrative Example 2: Direct Method and Allowance Method
allowance balance. (Periodic Inventory System)
● Preferably, the allowance method is used in order that the Assume the following data for Song Joong Ki (SJK)
effects of writedown and reversal of writedown can be company. The company uses a periodic system and FIFO method of
clearly identified. cost allocation.
● As a matter of fact, PAS 2, paragraph 36, requires
disclosure of the amount of any inventory writedown and
the amount of any reversal of inventory writedown.
● The gain on reversal of inventory writedown is presented
as a deduction from cost of goods sold.
● PAS 2, paragraph 34, provides that the amount of any
reversal of any writedown of inventory arising from an Journal Entries:
increase in net realizable value shall be recognized as a
reduction in the amount of inventory recognized as an
expense in the period in which the reversal occurs.
● Th amount of inventory recognized as an expense of the
period is actually the cost of goods sold during the period.

Presentation in Profit or loss: Direct method and Allowance

Method

Direct method:
The beginning and ending inventory are reported directly
at the lower of cost and net realizable value; hence, the decline in
net realizable value is absorbed by the cost of goods sold.

Allowance Method:
Both the beginning and ending inventories are measured
at cost in the computation of the cost of goods sold. The adjustment
in the balance of the allowance is presented as other income
(recovery) or other operating expenses (decline) in profit or loss.
The adjustment can also be closed to COGS. Presentation would
depend on the policy of the entity. If they are not closed to COGS,
presentation would look like this:
Illustrative Example 3: Direct Method and Allowance Method
(Perpetual Inventory System)
Assume the following data for Song Joong Ki (SJK)
company. The company uses Perpetual Inventory System
● Accordingly, agricultural crops that have been harvested
or mineral products that have been extracted are measured
at net realizable value:
● When a sale is assured under a forward contract or
government guarantee
● When a homogenous market exists and there is a
negligible risk failure to sell

Commodities of broker-traders
● PAS 2, paragraph 3, provides that commodities of
Journal Entries: broker-traders are measured at fair value less cost of
disposal.
● PFRS 13, paragraph 9, fair value = price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants.
● Broker traders = buy and sell commodities for others or on
their own account

OTHER INVENTORY ISSUES

Purchase Commitments
● Purchase Commitments are obligations of the entity to
acquire certain goods sometime in the future at a fixed
price and fixed quantity.
● Actually, a purchase contract has already been made for
future delivery of goods fixed in price and in quantity.
● Where the purchase commitments are significant or
unusual, disclosure is required in the accompanying notes
to financial statements.
● Any losses which are expected to arise from firm and non
cancelable commitments shall be recognized.
● If there is a decline in purchase price after a purchase
commitment has been made, a loss is recorded in the
period of the price decline.
● Note that a purchase commitment must be noncancelable
in order that a loss purchase commitment can be
recognized.
● Thus, if at the end of the reporting period, the purchase
price falls below the agreed price the difference is
accounted for as a debit to loss on purchase commitments
and a credit to an estimated liability.
● The loss on purchase commitment is classified as other
expense and the estimated liability for purchase
commitment is classified as current liability.

Agricultural, forest, and mineral products

● PAS 2, paragraph 4, provides that inventories of
agricultural, forest, and mineral products are measured at
net realizable value at certain stages of production.