[CFAS] Lecture 05 - IAS 2: Inventories

Introduction to IAS 200:00:18

The objective of IAS 2 is to prescribe accounting treatments for inventories, including guidance on cost determination, recognition as an expense, and handling write-downs to net realizable value.

Inventory Classifications and Scope00:01:16

Defines inventory types such as merchandise, finished goods, work-in-process, and raw materials. It also outlines what is excluded from the standard, such as construction contracts and financial instruments.

Measurement and Cost Determination00:03:57

Explains that inventory must be valued at the lower of cost or net realizable value (NRV). Details what costs should be included in inventory (purchase costs, conversion costs) and what should be excluded (storage, selling costs).

Cost Formulas and Presentation00:05:42

Discusses allowed cost formulas including specific identification, FIFO, and weighted average. Notes that LIFO is no longer permitted under IAS 2 and explains the presentation of expenses by function or nature.

Disclosure and Review00:07:41

Lists required disclosures such as accounting policies and carrying amounts, followed by a short quiz to reinforce concepts like inventory definitions, NRV, and measurement standards.