Chapter 7 - Inventories: IAS 2. The main contents of the chapter consist of mains parts: Related standards, IAS 2, current GAAP comparisons, IFRS financial statement disclosures, looking ahead, end-of-chapter practice. | Inventories: IAS 2 Wiecek and Young IFRS Primer Chapter 7 Inventories Related standards IAS 2 Current GAAP comparisons IFRS financial statement disclosures Looking ahead End-of-chapter practice Related Standards FAS 151 Inventory costs—an amendment of ARB 43 ARB 43 Inventories Related Standards IAS 11 Construction contracts IAS 32 Financial instruments: presentation IAS 39 Financial instruments: recognition and measurement IAS 41 Agriculture IAS 2 - Overview Objective and scope Measurement Expense recognition Disclosure IAS 2 - Objective and Scope Standards for what costs are recognized as inventory costs and when these costs are transferred to the income statement as expense IAS 2 excludes construction work-in-progress, inventories of financial instruments, and biological inventory assets related to agricultural activity and agricultural products at the point of harvest IAS 2 - Objective and Scope Inventories are assets: 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 IAS 2 - Measurement Inventories are measured at the lower of cost and net realizable value (LC and NRV) Need to know: - what costs are included - what cost formulas are permitted - how net realizable value is determined IAS 2 - Measurement Costs included: Purchase costs Conversion costs Other inventoriable costs IAS 2 - Measurement Purchase costs - purchase price and all costs directly attributable to their acquisition such as non-refundable taxes, transportation and handling, reduced by volume discounts and rebates IAS 2 - Measurement Conversion costs - direct labor, indirect variable and fixed production overhead costs - variable production overhead: allocate to inventory based on actual usage - fixed production overhead: allocate to production based on normal operating capacity (except when abnormally . | Inventories: IAS 2 Wiecek and Young IFRS Primer Chapter 7 Inventories Related standards IAS 2 Current GAAP comparisons IFRS financial statement disclosures Looking ahead End-of-chapter practice Related Standards FAS 151 Inventory costs—an amendment of ARB 43 ARB 43 Inventories Related Standards IAS 11 Construction contracts IAS 32 Financial instruments: presentation IAS 39 Financial instruments: recognition and measurement IAS 41 Agriculture IAS 2 - Overview Objective and scope Measurement Expense recognition Disclosure IAS 2 - Objective and Scope Standards for what costs are recognized as inventory costs and when these costs are transferred to the income statement as expense IAS 2 excludes construction work-in-progress, inventories of financial instruments, and biological inventory assets related to agricultural activity and agricultural products at the point of harvest IAS 2 - Objective and Scope Inventories are assets: held for sale in the ordinary course of
