| READING 22 - INVENTORIES | ||
| | USGAAP | IFRS |
| Inventory Cost Flow Method | 4 methods: · Specific Identification, · FIFO · W. Avg. Cost · LIFO | 3 methods: · Specific Identification, · FIFO · W. Avg. Cost |
| Change in Inventory valuation method | · Allowed only if it results in more reliable and relevant information. · Thorough Disclosure of why the new method is superior and preferable · If change is from LIFO to any other method then applied retrospectively · If change is to LIFO then prospectively applied | · Allowed only if it results in more reliable and relevant information. · If change is justifiable then it is applied retrospectively |
| Inventory Valuation Rules | · Measured at lower of Cost or Market · Market usually = replacement cost · NRV – Normal Profit < Market < NRV | · Measured at lower of Cost or NRV · NRV = Est. Selling Price – Est. Selling & Completion Cost |
| Disclosure | · Either on Balance sheet or Foot Notes carrying amount in classifications suitable to company must be disclosed · Company using LIFO method must disclose LIFO Reserves | · Either on Balance sheet or Foot Notes carrying amount in classifications suitable to company must be disclosed |
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