BIM33132 - Stock: valuation: International Accounting Standard (IAS) 2 Inventories
The IAS on stock is named Inventories, which is the same term as
that commonly used in the USA.
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.
These inventories should be measured at the lower of cost and
net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business less the estimated costs
of completion and the estimated costs necessary to make the sale.
The basic principles are the same as SSAP9.
IAS2 does allow last in first out as a cost allocation
method, and this is not allowable for tax purposes.
