IAS 2 Objective Scope Definitions


1 The objective of this Standard is to prescribe the accounting treatment for inventories. A primary issue in accounting for inventories is the amount of cost to be recognised as an asset and carried forward until the related revenues are recognised. This Standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realisable value. It also provides guidance on the cost formulas that are used to assign … Continue reading

IAS 2 Measurement of inventories

9 Inventories shall be measured at the lower of cost and net realisable value.

Cost of inventories

10 The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.


11 The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other … Continue reading

IAS 2 Recognition as an expense

34 When inventories are sold, the carrying amount of those inventories shall be recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories shall be recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, shall be recognised as a … Continue reading

IAS 2 Disclosure

36 The financial statements shall disclose:

  1. the accounting policies adopted in measuring inventories, including the cost formula used;
  2. the total carrying amount of inventories and the carrying amount in classifications appropriate to the entity;
  3. the carrying amount of inventories carried at fair value less costs to sell;
  4. the amount of inventories recognised as an expense during the period;
  5. the amount of any write-down of inventories recognised as an expense in the period in accordance with paragraph 34;
  6. the
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