I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

accounting policies adopted in measuring inventories, including the cost formula used' 

(b) 'The 

total carrying amount of inventories and the carrying amount in classifications appropriate 

to the entity' 

(c) 'The 

carrying amount of inventories carried at fair value less costs to sell' (NRV) 

 

(IAS 2, para. 36) 

Example disclosure 

An example of disclosure for inventories is given below. 

   

Accounting policies  

  

Inventories 

Inventories are valued at the lower of cost and net realisable value. Cost is determined using the FIFO 

method. Net realisable value is the estimated selling price in the ordinary course of business, less the 

costs estimated to make the sale. 

Note X  

Inventories 

 

 

 

20X1 

$'000 

20X0 

$'000 

Raw materials 

 31 

 28 

Work in progress 

 23 

 25 

Finished goods 

 25 

 15 

 

 79 

 68 

Included in the carrying value presented above was $8,000 (20X0: $10,000) of inventories held at net 

realisable value.  

 

 

This chapter, in addition to Chapters 8 to 12, will help you fulfil the following requirement of 

performance objective PO6, 'Record and process transactions and events':  

 

Apply the appropriate requirements of relevant accounting standards and policies to economic 

transactions and events. 

BPP Tutor Toolkit Copy

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CHAPTER 7  

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  INVENTORY