{"id":"F2015L01624","name":"AASB 102 - Inventories - July 2015","slug":"aasb-102-inventories-july-2015","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":93445,"registerId":"commonwealth-F2015L01624-current","compilationNumber":null,"startDate":"2026-04-02","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"AASB 102 - Inventories - July 2015","content":"| Compiled AASB Standard | AASB 102 |\n| ---------------------- | -------- |\n\nInventories\n\nThis compiled Standard applies to annual periods beginning on or after 1 January 2022. Earlier application is permitted for annual periods beginning after 24 July 2014 but before 1 January 2022. It incorporates relevant amendments made up to and including 20 December 2021.\n\nPrepared on 7 April 2022 by the staff of the Australian Accounting Standards Board.\n\nCompilation no. 3\n\nCompilation date: 31 December 2021\n\n![AASB logo with Australian crest and text identifying the Australian Government and the Australian Accounting Standards Board.](image.001.png)\n\nObtaining copies of Accounting Standards\n\nCompiled versions of Standards, original Standards and amending Standards (see Compilation Details) are available on the AASB website: www.aasb.gov.au.\n\nAustralian Accounting Standards Board\n\nPO Box 204\n\nCollins Street West\n\nVictoria 8007\n\nAUSTRALIA\n\nPhone: (03) 9617 7600\n\nE-mail: standard@aasb.gov.au\n\nWebsite: www.aasb.gov.au\n\nOther enquiries\n\nPhone: (03) 9617 7600\n\nE-mail: standard@aasb.gov.au\n\nCOPYRIGHT\n\n© Commonwealth of Australia 2022\n\nThis compiled AASB Standard contains IFRS Foundation copyright material. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgment of the source. Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to The National Director, Australian Accounting Standards Board, PO Box 204, Collins Street West, Victoria 8007.\n\nAll existing rights in this material are reserved outside Australia. Reproduction outside Australia in unaltered form (retaining this notice) is permitted for personal and non-commercial use only. Further information and requests for authorisation to reproduce for commercial purposes outside Australia should be addressed to the IFRS Foundation at www.ifrs.org.\n\nContents\n\nCOMPARISON WITH IAS 2\n\nACCOUNTING STANDARD\n\nAASB 102 INVENTORIES\n\nfrom paragraph\n\nObjective 1\n\nScope 2\n\nDefinitions 6\n\nMeasurement of inventories 9\n\nCost of inventories 10\n\nCosts of purchase 11\n\nCosts of conversion 12\n\nOther costs 15\n\nCost of inventories of a service provider\n\nCost of agricultural produce harvested from biological assets 20\n\nTechniques for the measurement of cost 21\n\nCost formulas 23\n\nNet realisable value 28\n\nRecognition as an expense 34\n\nDisclosure 36\n\nEffective date 40\n\nWithdrawal of other pronouncements\n\nTransition Aus42.1\n\nCommencement of the legislative instrument\n\nWithdrawal of AASB pronouncements Aus42.4\n\nAppendices\n\nA Australian defined terms\n\nB Australian simplified disclosures for Tier 2 entities\n\nCOMPILATION DETAILS\n\nDeleted IAS 2 Text\n\nBasis for Conclusions on AASB 2007-5\n\nAvailable on the AASB Website\n\nBasis for Conclusions on IAS 2\n\nAustralian Accounting Standard AASB 102 Inventories (as amended) is set out in paragraphs 1 – Aus42.4 and Appendices A and B. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. AASB 102 is to be read in the context of other Australian Accounting Standards, including AASB 1048 Interpretation of Standards, which identifies the Australian Accounting Interpretations, and AASB 1057 Application of Australian Accounting Standards. In the absence of explicit guidance, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies.\n\nComparison with IAS 2\n\nAASB 102 Inventories as amended incorporates IAS 2 Inventories as issued and amended by the International Accounting Standards Board (IASB). Australian‑specific paragraphs (which are not included in IAS 2) are identified with the prefix “Aus”. Paragraphs that apply only to not-for-profit entities begin by identifying their limited applicability.\n\nTier 1\n\nFor-profit entities complying with AASB 102 also comply with IAS 2.\n\nNot-for-profit entities’ compliance with IAS 2 will depend on whether any “Aus” paragraphs that specifically apply to not-for-profit entities provide additional guidance or contain applicable requirements that are inconsistent with IAS 2.\n\nTier 2\n\nEntities preparing general purpose financial statements under Australian Accounting Standards – Simplified Disclosures (Tier 2) will not be in compliance with IFRS Standards.\n\nAASB 1053 Application of Tiers of Australian Accounting Standards explains the two tiers of reporting requirements.\n\nAccounting Standard AASB 102\n\nThe Australian Accounting Standards Board made Accounting Standard AASB 102 Inventories under section 334 of the Corporations Act 2001 on 24 July 2015.\n\nThis compiled version of AASB 102 applies to annual periods beginning on or after 1 January 2022. It incorporates relevant amendments contained in other AASB Standards made by the AASB up to and including 20 December 2021 (see Compilation Details).\n\nAccounting Standard AASB 102  \nInventories\n\nObjective\n\n    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 costs to inventories.\n\nScope\n\n    2 This Standard applies to all inventories, except:\n    (a) \\[deleted\\]\n    (b) financial instruments (see AASB 132 Financial Instruments: Presentation and AASB 9 Financial Instruments); and\n    (c) biological assets related to agricultural activity and agricultural produce at the point of harvest (see AASB 141 Agriculture).\n\nAus2.1 Notwithstanding paragraph 2, in respect of not-for-profit entities, this Standard does not apply to work in progress of services to be provided for no or nominal consideration directly in return from the recipients.\n\n    3 This Standard does not apply to the measurement of inventories held by:\n    (a) producers of agricultural and forest products, agricultural produce after harvest, and minerals and mineral products, to the extent that they are measured at net realisable value in accordance with well-established practices in those industries. When such inventories are measured at net realisable value, changes in that value are recognised in profit or loss in the period of the change.\n    (b) commodity broker-traders who measure their inventories at fair value less costs to sell. When such inventories are measured at fair value less costs to sell, changes in fair value less costs to sell are recognised in profit or loss in the period of the change.\n    4 The inventories referred to in paragraph 3(a) are measured at net realisable value at certain stages of production. This occurs, for example, when agricultural crops have been harvested or minerals have been extracted and sale is assured under a forward contract or a government guarantee, or when an active market exists and there is a negligible risk of failure to sell. These inventories are excluded from only the measurement requirements of this Standard.\n    5 Broker-traders are those who buy or sell commodities for others or on their own account. The inventories referred to in paragraph 3(b) are principally acquired with the purpose of selling in the near future and generating a profit from fluctuations in price or broker-traders’ margin. When these inventories are measured at fair value less costs to sell, they are excluded from only the measurement requirements of this Standard.\n\nDefinitions\n\n    6 The following terms are used in this Standard with the meanings specified:\n    Inventories are assets:\n    (a) held for sale in the ordinary course of business;\n    (b) in the process of production for such sale; or\n    (c) in the form of materials or supplies to be consumed in the production process or in the rendering of services.\n    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.\n    Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. (See AASB 13 Fair Value Measurement.)\n    7 Net realisable value refers to the net amount that an entity expects to realise from the sale of inventory in the ordinary course of business. Fair value reflects the price at which an orderly transaction to sell the same inventory in the principal (or most advantageous) market for that inventory would take place between market participants at the measurement date. The former is an entity-specific value; the latter is not. Net realisable value for inventories may not equal fair value less costs to sell.\n    8 Inventories encompass goods purchased and held for resale including, for example, merchandise purchased by a retailer and held for resale, or land and other property held for resale. Inventories also encompass finished goods produced, or work in progress being produced, by the entity and include materials and supplies awaiting use in the production process. Costs incurred to fulfil a contract with a customer that do not give rise to inventories (or assets within the scope of another Standard) are accounted for in accordance with AASB 15 Revenue from Contracts with Customers.\n\nMeasurement of inventories\n\n    9 Inventories shall be measured at the lower of cost and net realisable value.\n\nAus9.1 Notwithstanding paragraph 9, each not-for-profit entity shall measure inventories held for distribution at cost, adjusted when applicable for any loss of service potential.\n\nAus9.2 Not-for-profit entities would need to use judgment in determining the factors relevant to the circumstances in assessing whether there is a loss of service potential for inventories held for distribution. For many inventories held for distribution, a loss of service potential would be identified and measured based on the existence of a current replacement cost that is lower than the original acquisition cost or other subsequent carrying amount. For other inventories held for distribution, a loss of service potential might be identified and measured based on a loss of operating capacity due to obsolescence. Different bases for determining whether there has been a loss of service potential and the measurement of that loss may apply to different inventories held for distribution within the same entity.\n\nCost of inventories\n\n    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.\n\nAus10.1 Notwithstanding paragraph 10 and subject to paragraph Aus10.2, not-for-profit entities shall initially measure the cost of inventories at current replacement cost where the consideration for those inventories is significantly less than fair value principally to enable the entity to further its objectives. AASB 1058 Income of Not-for-Profit Entities addresses the recognition of related amounts.\n\nAus10.2 As a practical expedient, where a not-for-profit entity acquires inventory for consideration that is significantly less than fair value principally to enable the entity to further its objectives, the entity may elect to recognise an item of inventory based on an assessment of the materiality either of the individual item or of inventories at an aggregate or portfolio level.\n\nCosts of purchase\n\n    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 costs directly attributable to the acquisition of finished goods, materials and services. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.\n\nCosts of conversion\n\n    12 The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Fixed production overheads are those indirect costs of production that remain relatively constant regardless of the volume of production, such as depreciation and maintenance of factory buildings, equipment and right-of-use assets used in the production process, and the cost of factory management and administration. Variable production overheads are those indirect costs of production that vary directly, or nearly directly, with the volume of production, such as indirect materials and indirect labour.\n    13 The allocation of fixed production overheads to the costs of conversion is based on the normal capacity of the production facilities. Normal capacity is the production expected to be achieved on average over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. The actual level of production may be used if it approximates normal capacity. The amount of fixed overhead allocated to each unit of production is not increased as a consequence of low production or idle plant. Unallocated overheads are recognised as an expense in the period in which they are incurred. In periods of abnormally high production, the amount of fixed overhead allocated to each unit of production is decreased so that inventories are not measured above cost. Variable production overheads are allocated to each unit of production on the basis of the actual use of the production facilities.\n    14 A production process may result in more than one product being produced simultaneously. This is the case, for example, when joint products are produced or when there is a main product and a by-product. When the costs of conversion of each product are not separately identifiable, they are allocated between the products on a rational and consistent basis. The allocation may be based, for example, on the relative sales value of each product either at the stage in the production process when the products become separately identifiable, or at the completion of production. Most by-products, by their nature, are immaterial. When this is the case, they are often measured at net realisable value and this value is deducted from the cost of the main product. As a result, the carrying amount of the main product is not materially different from its cost.\n\nOther costs\n\n    15 Other costs are included in the cost of inventories only to the extent that they are incurred in bringing the inventories to their present location and condition. For example, it may be appropriate to include non-production overheads or the costs of designing products for specific customers in the cost of inventories.\n    16 Examples of costs excluded from the cost of inventories and recognised as expenses in the period in which they are incurred are:\n    (a) abnormal amounts of wasted materials, labour or other production costs;\n    (b) storage costs, unless those costs are necessary in the production process before a further production stage;\n    (c) administrative overheads that do not contribute to bringing inventories to their present location and condition; and\n    (d) selling costs.\n    17 AASB 123 Borrowing Costs identifies limited circumstances where borrowing costs are included in the cost of inventories.\n    18 An entity may purchase inventories on deferred settlement terms. When the arrangement effectively contains a financing element, that element, for example a difference between the purchase price for normal credit terms and the amount paid, is recognised as interest expense over the period of the financing.\n\nCost of inventories of a service provider\n\n    19 \\[Deleted\\]\n\nCost of agricultural produce harvested from biological assets\n\n    20 In accordance with AASB 141 Agriculture inventories comprising agricultural produce that an entity has harvested from its biological assets are measured on initial recognition at their fair value less costs to sell at the point of harvest. This is the cost of the inventories at that date for application of this Standard.\n\nTechniques for the measurement of cost\n\n    21 Techniques for the measurement of the cost of inventories, such as the standard cost method or the retail method, may be used for convenience if the results approximate cost. Standard costs take into account normal levels of materials and supplies, labour, efficiency and capacity utilisation. They are regularly reviewed and, if necessary, revised in the light of current conditions.\n    22 The retail method is often used in the retail industry for measuring inventories of large numbers of rapidly changing items with similar margins for which it is impracticable to use other costing methods. The cost of the inventory is determined by reducing the sales value of the inventory by the appropriate percentage gross margin. The percentage used takes into consideration inventory that has been marked down to below its original selling price. An average percentage for each retail department is often used.\n\nCost formulas\n\n    23 The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects shall be assigned by using specific identification of their individual costs.\n    24 Specific identification of cost means that specific costs are attributed to identified items of inventory. This is the appropriate treatment for items that are segregated for a specific project, regardless of whether they have been bought or produced. However, specific identification of costs is inappropriate when there are large numbers of items of inventory that are ordinarily interchangeable. In such circumstances, the method of selecting those items that remain in inventories could be used to obtain predetermined effects on profit or loss.\n    25 The cost of inventories, other than those dealt with in paragraph 23, shall be assigned by using the first-in, first-out (FIFO) or weighted average cost formula. An entity shall use the same cost formula for all inventories having a similar nature and use to the entity. For inventories with a different nature or use, different cost formulas may be justified.\n    26 For example, inventories used in one operating segment may have a use to the entity different from the same type of inventories used in another operating segment. However, a difference in geographical location of inventories (or in the respective tax rules), by itself, is not sufficient to justify the use of different cost formulas.\n    27 The FIFO formula assumes that the items of inventory that were purchased or produced first are sold first, and consequently the items remaining in inventory at the end of the period are those most recently purchased or produced. Under the weighted average cost formula, the cost of each item is determined from the weighted average of the cost of similar items at the beginning of a period and the cost of similar items purchased or produced during the period. The average may be calculated on a periodic basis, or as each additional shipment is received, depending upon the circumstances of the entity.\n\nNet realisable value\n\n    28 The cost of inventories may not be recoverable if those inventories are damaged, if they have become wholly or partially obsolete, or if their selling prices have declined. The cost of inventories may also not be recoverable if the estimated costs of completion or the estimated costs to be incurred to make the sale have increased. The practice of writing inventories down below cost to net realisable value is consistent with the view that assets should not be carried in excess of amounts expected to be realised from their sale or use.\n    29 Inventories are usually written down to net realisable value item by item. In some circumstances, however, it may be appropriate to group similar or related items. This may be the case with items of inventory relating to the same product line that have similar purposes or end uses, are produced and marketed in the same geographical area, and cannot be practicably evaluated separately from other items in that product line. It is not appropriate to write inventories down on the basis of a classification of inventory, for example, finished goods, or all the inventories in a particular operating segment.\n    30 Estimates of net realisable value are based on the most reliable evidence available at the time the estimates are made, of the amount the inventories are expected to realise. These estimates take into consideration fluctuations of price or cost directly relating to events occurring after the end of the period to the extent that such events confirm conditions existing at the end of the period.\n    31 Estimates of net realisable value also take into consideration the purpose for which the inventory is held. For example, the net realisable value of the quantity of inventory held to satisfy firm sales or service contracts is based on the contract price. If the sales contracts are for less than the inventory quantities held, the net realisable value of the excess is based on general selling prices. Provisions may arise from firm sales contracts in excess of inventory quantities held or from firm purchase contracts. Such provisions are dealt with under AASB 137 Provisions, Contingent Liabilities and Contingent Assets.\n    32 Materials and other supplies held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. However, when a decline in the price of materials indicates that the cost of the finished products exceeds net realisable value, the materials are written down to net realisable value. In such circumstances, the replacement cost of the materials may be the best available measure of their net realisable value.\n    33 A new assessment is made of net realisable value in each subsequent period. When the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realisable value because of changed economic circumstances, the amount of the write-down is reversed (ie the reversal is limited to the amount of the original write-down) so that the new carrying amount is the lower of the cost and the revised net realisable value. This occurs, for example, when an item of inventory that is carried at net realisable value, because its selling price has declined, is still on hand in a subsequent period and its selling price has increased.\n\nRecognition as an expense\n\n    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 reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.\n\nAus34.1 When inventories held for distribution by a not-for-profit entity are distributed, the carrying amount of those inventories shall be recognised as an expense. The amount of any write-down of inventories for loss of service potential and all losses of inventories shall be recognised as an expense in the period in which the write-down or loss occurs. The amount of any reversal of any write-down of inventories arising from a reversal of the circumstances that gave rise to the loss of service potential shall be recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.\n\n    35 Some inventories may be allocated to other asset accounts, for example, inventory used as a component of self-constructed property, plant or equipment. Inventories allocated to another asset in this way are recognised as an expense during the useful life of that asset.\n\nDisclosure\n\n    36 The financial statements shall disclose:\n    (a) the accounting policies adopted in measuring inventories, including the cost formula used;\n    (b) the total carrying amount of inventories and the carrying amount in classifications appropriate to the entity;\n    (c) the carrying amount of inventories carried at fair value less costs to sell;\n    (d) the amount of inventories recognised as an expense during the period;\n    (e) the amount of any write-down of inventories recognised as an expense in the period in accordance with paragraph 34;\n    (f) the amount of any reversal of any write-down that is recognised as a reduction in the amount of inventories recognised as expense in the period in accordance with paragraph 34;\n    (g) the circumstances or events that led to the reversal of a write-down of inventories in accordance with paragraph 34; and\n    (h) the carrying amount of inventories pledged as security for liabilities.\n\nAus36.1 Notwithstanding paragraph 36, in respect of not-for-profit entities, the financial statements shall disclose:\n\n    (a) the accounting policies adopted in measuring inventories held for distribution, including the cost formula used;\n    (b) the total carrying amount of inventories held for distribution and the carrying amount in classifications appropriate to the entity;\n    (c) the amount of inventories held for distribution recognised as an expense during the period in accordance with paragraph Aus34.1;\n    (d) the amount of any write-down of inventories held for distribution recognised as an expense in the period in accordance with paragraph Aus34.1;\n    (e) the amount of any reversal of any write-down that is recognised as a reduction in the amount of inventories held for distribution recognised as an expense in the period in accordance with paragraph Aus34.1;\n    (f) the circumstances or events that led to the reversal of a write-down of inventories held for distribution in accordance with paragraph Aus34.1;\n    (g) the carrying amount of inventories held for distribution pledged as security for liabilities; and\n    (h) the basis on which any loss of service potential of inventories held for distribution is assessed, or the bases when more than one basis is used.\n    37 Information about the carrying amounts held in different classifications of inventories and the extent of the changes in these assets is useful to financial statement users. Common classifications of inventories are merchandise, production supplies, materials, work in progress and finished goods.\n    38 The amount of inventories recognised as an expense during the period, which is often referred to as cost of sales, consists of those costs previously included in the measurement of inventory that has now been sold and unallocated production overheads and abnormal amounts of production costs of inventories. The circumstances of the entity may also warrant the inclusion of other amounts, such as distribution costs.\n    39 Some entities adopt a format for profit or loss that results in amounts being disclosed other than the cost of inventories recognised as an expense during the period. Under this format, an entity presents an analysis of expenses using a classification based on the nature of expenses. In this case, the entity discloses the costs recognised as an expense for raw materials and consumables, labour costs and other costs together with the amount of the net change in inventories for the period.\n\nEffective date\n\n    40 An entity shall apply this Standard for annual periods beginning on or after 1 January 2018. Earlier application is encouraged for periods beginning after 24 July 2014 but before 1 January 2018. If an entity applies this Standard for a period beginning before 1 January 2018, it shall disclose that fact.\n    40A \\[Deleted\\]\n    40B \\[Deleted\\]\n    40C \\[Deleted by the AASB\\]\n    40D \\[Deleted\\]\n    40E AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15, issued in December 2014, amended the previous version of this Standard as follows: amended paragraphs 2, 8, 29 and 37 and deleted paragraph 19. An entity shall apply those amendments when it applies AASB 15.\n    40F AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (as amended) amended the previous version of this Standard as follows: amended paragraph 2(b) and deleted paragraph 40A. Paragraph 40B, added by AASB 2010-7, was deleted by AASB 2014-1 Amendments to Australian Accounting Standards. Paragraph 40D, added by AASB 2014-1 was deleted by AASB 2014-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2014). An entity shall apply those amendments when it applies AASB 9.\n    40G AASB 16 Leases, issued in February 2016, amended paragraph 12. An entity shall apply that amendment when it applies AASB 16.\n\nWithdrawal of other pronouncements\n\n    41–  \n    42 \\[Deleted by the AASB\\]\n\nTransition\n\nAus42.1 Not-for-profit entities shall apply paragraph Aus9.1 and measure inventories held for distribution at cost, adjusted when applicable for any loss of service potential, on a prospective basis from the beginning of the annual period to which this Standard is first applied.\n\nAus42.2 Under paragraph Aus42.1, not-for-profit entities shall make any necessary adjustment to the opening balance of inventories held for distribution, previously carried at the lower of cost and current replacement cost, against opening retained earnings for the current annual period. Accordingly, comparative information is not adjusted.\n\nCommencement of the legislative instrument\n\nAus42.3 \\[Repealed\\]\n\nWithdrawal of AASB pronouncements\n\nAus42.4 This Standard repeals AASB 102 Inventories issued in July 2004. Despite the repeal, after the time this Standard starts to apply under section 334 of the Corporations Act (either generally or in relation to an individual entity), the repealed Standard continues to apply in relation to any period ending before that time as if the repeal had not occurred.\n\n    \\[Note: When this Standard applies under section 334 of the Corporations Act (either generally or in relation to an individual entity), it supersedes the application of the repealed Standard.\\]\n\nAppendix A  \nAustralian defined terms\n\n> Note: This appendix is an integral part of AASB 102.\n\nAus6.1 The following terms are also used in this Standard with the meanings specified.\n\n    A not-for-profit entity is an entity whose principal objective is not the generation of profit. A not-for-profit entity can be a single entity or a group of entities comprising the parent entity and each of the entities that it controls.\n    In respect of not-for-profit entities, current replacement cost is the cost the entity would incur to acquire the asset at the end of the reporting period.\n    In respect of not-for-profit entities, inventories held for distribution are assets:\n    (a) held for distribution at no or nominal consideration in the ordinary course of operations;\n    (b) in the process of production for distribution at no or nominal consideration in the ordinary course of operations; or\n    (c) in the form of materials or supplies to be consumed in the production process or in the rendering of services at no or nominal consideration.[\\[1\\]](#_ftn1)\n\nAus8.1 A not-for-profit entity may hold inventories whose future economic benefits or service potential are not directly related to their ability to generate net cash inflows. These types of inventories may arise when an entity has determined to distribute certain goods at no charge or for a nominal amount. In these cases, the future economic benefits or service potential of the inventory for financial reporting purposes is reflected by the amount the entity would need to pay to acquire the economic benefits or service potential if this was necessary to achieve the objectives of the entity. Where the economic benefits or service potential cannot be acquired in the market, an estimate of replacement cost will need to be made. If the purpose for which the inventory is held changes, then the inventory is valued using the provisions of paragraph 9.\n\nAus8.2 The replacement cost that an entity would be prepared to incur in respect of an item of inventory would reflect any obsolescence or any other impairment.\n\nAppendix B  \nAustralian simplified disclosures for Tier 2 entities\n\nThis appendix is an integral part of the Standard.\n\nAusB1 Paragraphs 36–39 do not apply to entities preparing general purpose financial statements that apply AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities.\n\nCompilation details  \nAccounting Standard AASB 102 Inventories (as amended)\n\n> Note: Compilation details are not part of AASB 102\n\nThis compiled Standard applies to annual periods beginning on or after 1 January 2022. It takes into account amendments up to and including 20 December 2021 and was prepared on 7 April 2022 by the staff of the Australian Accounting Standards Board (AASB).\n\nThis compilation is not a separate Accounting Standard made by the AASB. Instead, it is a representation of AASB 102 (July 2015) as amended by other Accounting Standards, which are listed in the table below.\n\nTable of Standards\n\n| Standard    | Date made   | FRL identifier | Commence-ment date | Effective date(annual periods… on or after …) | Application, saving or transitional provisions |\n| ----------- | ----------- | -------------- | ------------------ | --------------------------------------------- | ---------------------------------------------- |\n| AASB 102    | 24 Jul 2015 | F2015L01624    | 31 Dec 2017        | (beginning) 1 Jan 2018                        | see (a) below                                  |\n| AASB 16     | 23 Feb 2016 | F2016L00233    | 31 Dec 2018        | (beginning) 1 Jan 2019                        | see (b) below                                  |\n| AASB 1058   | 9 Dec 2016  | F2017L00042    | 31 Dec 2018        | (beginning) 1 Jan 2019                        | see (b) below                                  |\n| AASB 2016-7 | 9 Dec 2016  | F2017L00043    | 31 Dec 2016        | (beginning) 1 Jan 2017                        | see (c) below                                  |\n| AASB 1060   | 6 Mar 2020  | F2020L00288    | 30 Jun 2021        | (beginning) 1 Jul 2021                        | see (d) below                                  |\n| AASB 2021-7 | 20 Dec 2021 | F2021L01883    | 31 Dec 2021        | (beginning) 1 Jan 2022                        | see (e) below                                  |\n\n    (a) Entities may elect to apply this Standard to periods beginning after 24 July 2014 but before 1 January 2018.\n    (b) Entities may elect to apply this Standard to annual periods beginning before 1 January 2019, provided that AASB 15 Revenue from Contracts with Customers is also applied to the same period.\n    (c) AASB 2016-7 deferred the effective date of AASB 15 (and its consequential amendments in AASB 2014-5) for not-for-profit entities to annual reporting periods beginning on or after 1 January 2019, instead of 1 January 2018. However, earlier application of AASB 102 (2015) incorporating the text that relates to AASB 15 is permitted, provided that AASB 15 is also applied.\n    (d) Entities may elect to apply this Standard to annual periods beginning before 1 July 2021.\n    (e) Entities may elect to apply this Standard to annual periods beginning before 1 January 2022.\n\nTable of amendments\n\n| Paragraph affected | How affected | By … [paragraph/page]        |\n| ------------------ | ------------ | ---------------------------- |\n| Aus10.1            | amended      | AASB 1058 [page 23]          |\n| Aus10.2            | added        | AASB 1058 [page 23]          |\n| 12                 | amended      | AASB 16 [page 46]            |\n| Aus36.1            | amended      | AASB 2021-7 [30]             |\n| 40G                | added        | AASB 16 [page 47]            |\n| Aus42.3            | repealed     | Legislation Act 2003, s. 48D |\n| Appendix B         | replaced     | AASB 1060 [page 61]          |\n\nDeleted IAS 2 text\n\n> Note: Deleted IAS 2 text is not part of AASB 102.\n\n    40C IFRS 13, issued in May 2011, amended the definition of fair value in paragraph 6 and amended paragraph 7\\. An entity shall apply those amendments when it applies IFRS 13.\n    41 This Standard supersedes IAS 2 Inventories (revised in 1993).\n    42 This Standard supersedes SIC-1 Consistency—Different Cost Formulas for Inventories.\n\nBasis for Conclusions on AASB 2007-5\n\n> Note: This Basis for Conclusions accompanies, but is not part of, AASB 102. The Basis for Conclusions was originally published with AASB 2007-5 Amendments to Australian Accounting Standard – Inventories Held for Distribution by Not-for-Profit Entities.\n\nBackground relating to standards on inventories\n\n    BC1 For reporting periods beginning prior to 1 January 2005, under AASB 1019 Inventories (now superseded by AASB 102 Inventories), inventories were defined only in terms of items held for sale or in the process of sale. The treatment of items in the nature of inventories that were not held for sale needed to be determined by analogy because they were not explicitly covered by AASB 1019.\n    BC2 Inventories held for distribution by not-for-profit entities were scoped into AASB 102, issued in July 2004, and were required to be measured at the lower of cost and current replacement cost.\n    BC3 This is the same as the requirement in the International Public Sector Accounting Standards Board’s IPSAS 12 Inventories issued in July 2001. (IPSAS 12 has since been revised in December 2006 for application from 1 January 2008.)\n    BC4 The Board notes that inventories held for distribution do not include major spare parts and stand-by equipment that qualify as property, plant and equipment, which are discussed in AASB 116 Property, Plant and Equipment at paragraphs 8 and 12.\n\nBackground relating to key issue\n\n    BC5 A number of constituents raised issues with the Board relating to the conceptual soundness of applying the lower of cost and current replacement cost treatment to inventories held for distribution as well as the practicality of its application to certain types of inventories held for distribution.\n    BC6 The Board considered the view that writing down inventory held for distribution when its current replacement cost falls below cost may result in the recognition of impairments when the service potential to the entity of those inventories remains unchanged. In addition, the Board noted that the service potential to the entity of inventories held for distribution may fall, but that current replacement cost to the entity may remain higher than the original cost. The Board concluded that this is in part because the lower of cost and current replacement cost requirement focuses on financial values, whereas the service potential of inventories held for distribution by many not-for-profit entities is considered in physical terms.\n    BC7 The Board also considered the practical problem that current replacement costs are sometimes not readily available for many of the inventories held for distribution that have long lives because they have not been replenished for long periods. In some cases, such inventories may have maintained their service potential, but may no longer be available in the form held by the entity.\n    BC8 The Board noted that a for-profit entity will readily know its costs and its net realisable values, because most businesses buy and sell inventories regularly. In a not-for-profit entity that holds inventories for distribution and buys and distributes them regularly, the lower of cost and current replacement cost requirement has been viewed as the nearest available equivalent requirement.\n    BC9 The Board noted that the practical problems emerge when the inventories held for distribution are retained over the long term and replacement costs are not readily available. A major part of the burden is the possible need to maintain records of three prices for each type of inventory: (1) the cost; (2) the up-to-date replacement cost in case there is a need for write down; and (3) in the event that the replacement cost has previously fallen below cost, that replacement cost \\[carrying amount\\]. The Board also noted that the records of the three prices might also need to be maintained to facilitate the reversal of write downs in the event that the circumstances that previously caused inventories to be written down below cost no longer exist or when there is clear evidence of an increase in current replacement cost because of changed economic circumstances.\n\nAlternative solutions\n\n    BC10 The Board considered developing a proposed solution only in respect of long-lived inventories held for distribution by not-for-profit entities in order to address the practical problems raised by constituents. However, the Board concluded that it would be more appropriate to develop a solution for all types of inventories held for distribution by not-for-profit entities that addresses the issues at both the principle and practical levels. This is because the Board prefers a solution based on a high-level principle that can be applied consistently by all not-for-profit entities in a manner that best suits the character of their inventories held for distribution.\n    BC11 Among the possible solutions considered by the Board was applying an AASB 136 Impairment of Assets\\-style impairment test, however, it was noted that this would have many of the problems already associated with the existing requirements.\n\nCost adjusted when applicable for any loss of service potential\n\n    BC12 The Board noted that the lower of cost and net realisable value requirement in AASB 102 in respect of inventories other than those held for distribution can be viewed as being based on a notion of recognising a loss of service potential in a for-profit environment. That is, an entity that seeks to sell inventories for more than they cost generally considers the service potential of those inventories in financial terms. If net realisable value falls below cost, the entity can be viewed as suffering a loss of service potential.\n    BC13 The Board observed that the lower of cost and current replacement cost requirement for measuring inventories held for distribution by not-for-profit entities can be viewed as seeking to emulate the approach taken for other inventories and its focus is also on a loss of value in financial terms. However, the Board considered that this financial measure of the loss of service potential may not always be the most relevant measure in respect of inventories held for distribution by not-for-profit entities for the reasons outlined in paragraph BC6.\n    BC14 The Board considered that the measurement of inventories held for distribution by not-for-profit entities at cost, adjusted when applicable for any loss of service potential, is consistent with the Framework for the Preparation and Presentation of Financial Statements, which notes at paragraph Aus49.1:\n    In respect of not-for-profit entities in the public or private sector, in pursuing their objectives, goods and services are provided that have the capacity to satisfy human wants and needs. Assets provide a means for entities to achieve their objectives. Future economic benefits or service potential is the essence of assets. Future economic benefits is synonymous with the notion of service potential, and is used in this Framework as a reference also to service potential. Future economic benefits can be described as the scarce capacity to provide benefits to the entities that use them, and is common to all assets irrespective of their physical or other form.\n    BC15 The Board noted that a fall in the current replacement cost of inventories held for distribution may at times indicate a loss of service potential, but that this is not necessarily always the case, and that a loss of service potential may at times be identified on other, more relevant, bases. For example, obsolescence, which may occur with or without there being a fall in current replacement cost, may be the main factor leading to a loss of service potential for many not-for-profit entities. The term ‘obsolescence’ covers both ‘technical obsolescence’ and ‘functional obsolescence’. Technical obsolescence occurs when an item still functions for some or all of the tasks it was originally acquired to do, but no longer matches existing technologies. Functional obsolescence occurs when an item no longer functions the way it did when it was first acquired. In either case, a loss of service potential may need to be recognised.\n    BC16 The Board also considered that a problem with a purely physical service potential approach is identifying ways in which physical service potential would be measured. However, the Board concluded that many not-for-profit entities will often be more likely to monitor the service potential of their inventories held for distribution than they are to monitor the current replacement costs of those inventories. The Board considered that this is especially likely to be the case when those inventories are important to maintaining its functions or operating capability and, therefore, often in cases when it is most likely to be material to the financial statements.\n    BC17 The Board considers that there is a need for the circumstances of a not-for-profit entity to be the determining factor behind its manner of assessing any loss of service potential for inventories held for distribution. The measurement requirement for inventories held for distribution would require each not-for-profit entity to identify the basis (or bases) for determining any loss of service potential that best suits the circumstances relating to the entity. Different bases may apply to different inventories held for distribution within the same entity.\n    BC18 There was considerable support for the approach of requiring inventories held for distribution to be measured at cost, adjusted for any loss of service potential, in the submissions on Exposure Draft ED 154 Proposed Amendments to AASB 102 – Inventories Held for Distribution by Not-for-Profit Entities. However, some submissions expressed concerns that the lower of cost and current replacement cost requirement is being applied without difficulty by many entities and argued that it might be unnecessarily disruptive to introduce the change proposed in ED 154.\n    BC19 The Board noted that a current replacement cost that is lower than cost might be a common way of identifying and measuring a loss of service potential for inventories held for distribution. Accordingly, many entities are likely to continue their existing practices under a revised AASB 102, and the Board concluded few entities would be disrupted by the change.\n    BC20 The Board concluded that the requirement to measure inventories held for distribution at cost, adjusted when applicable for any loss of service potential, would give rise to more relevant information that better reflects the various accountabilities of not-for-profit entities. In addition, the Board concluded that the requirement is likely to be more appropriate in practical terms than the former requirement in some circumstances.\n\nTransition\n\n    BC21 The Board considered that, in some cases, measuring at the lower of cost and current replacement cost versus measuring at cost, adjusted when applicable for any loss of service potential, would give rise to different carrying amounts for inventories held for distribution. The Board concluded that, on transition to the changed requirement, it is appropriate to require not-for-profit entities to adjust any difference prospectively against opening retained earnings and not amend comparative information on the basis that:\n    (a) there are likely to be practical problems associated with trying to retrospectively determine whether there have been further losses of service potential and precisely when they occurred, which may not be overcome by the impracticability override in AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors;\n    (b) the relatively short period of development involved in amending AASB 102 and, therefore, the absence of a long period during which constituents would be made aware of the changes; and\n    (c) requiring rather than permitting the prospective transitional approach is desirable from a comparability viewpoint.\n\n---\n\n[\\[1\\]](#_ftnref1) Paragraphs 10–18 and 20–27 in this Standard apply to both inventories (as defined in paragraph 6) and inventories held for distribution (as defined in paragraph Aus6.1).","sortOrder":0}],"analysis":{"kimi_summary":{"content_quality":"ok","complexity_score":5,"scope_assessment":{"changed":true,"description":"The original AASB 102 (2004) was a straightforward adoption of IAS 2 for for-profit inventory valuation. This version has expanded significantly to accommodate not-for-profit sector needs, introducing entirely new concepts like 'inventories held for distribution,' 'loss of service potential,' and 'current replacement cost' as alternative measurement bases. The standard now operates two parallel measurement regimes within one document, plus tiered disclosure frameworks, making it substantially broader than its original commercial inventory focus."},"complexity_factors":["Dual reporting framework with Tier 1 (full IFRS compliance) and Tier 2 (simplified disclosures) requirements","Multiple defined terms (6 core definitions plus 3 Australian-specific definitions in Appendix A)","Extensive not-for-profit carve-outs and modifications (Aus paragraphs) creating parallel measurement regimes","Cross-references to 6 other standards: AASB 9, AASB 13, AASB 15, AASB 16, AASB 1058, AASB 1060, AASB 123, AASB 132, AASB 137, AASB 141","Conditional measurement rules: standard 'lower of cost and NRV' vs. not-for-profit 'cost adjusted for loss of service potential'","Nested exceptions: general scope exclusions (financial instruments, biological assets) plus industry-specific measurement exemptions (agricultural producers, commodity broker-traders)","Transition provisions requiring prospective application with opening balance adjustments (Aus42.1-Aus42.2)","Compilation structure incorporating multiple amendment instruments with different effective dates"],"plain_english_summary":"**What this legislation does:**\n\nThis is the Australian Accounting Standard for **Inventories** (AASB 102). It tells businesses and organisations how to value and report stock, raw materials, and work-in-progress in their financial statements.\n\n**Key rules:**\n- **General rule:** Inventories must be valued at the **lower of cost or net realisable value** (what you paid vs. what you could sell it for, minus selling costs).\n- **Cost includes:** Purchase price, import duties, transport, plus manufacturing costs like labour and factory overheads.\n- **Cost formulas:** If items are interchangeable, use **FIFO** (first-in, first-out) or **weighted average cost**. For unique items (like a specific construction project), track the actual cost of each item.\n- **Write-downs:** If inventory is damaged, obsolete, or market prices drop, you must reduce its value in your books. If conditions improve later, you can reverse some of this write-down.\n\n**Special rules for not-for-profits:**\nCharities, government agencies, and other not-for-profit entities get different treatment for **inventories held for distribution** (goods given away for free or nominal charge, like disaster relief supplies):\n- They measure these at **cost**, adjusted only if there's a **loss of service potential** (not just because market prices dropped).\n- This recognises that a charity's \"inventory\" might still be fully useful for its mission even if it's old or cheap to replace.\n\n**Who it affects:**\n- **All entities** preparing financial statements under Australian Accounting Standards—companies, trusts, government bodies, and not-for-profits.\n- **Two tiers:** Large entities (Tier 1) follow full requirements; smaller entities (Tier 2) can use simplified disclosures.\n\n**Why it matters:**\nThis ensures inventory values on balance sheets are realistic and comparable. It prevents companies from inflating assets by claiming stock is worth more than it could actually sell for. For not-for-profits, it stops them from having to write down valuable aid supplies just because market prices fluctuated."},"flash_summary":{"complexity_score":6,"scope_assessment":{"changed":true,"description":"The Standard changes the measurement scope for inventories held for distribution by not‑for‑profit entities: it replaces the previous lower‑of‑cost‑and‑current‑replacement‑cost approach with a requirement to measure at cost, adjusted when applicable for any loss of service potential (Aus9.1, Aus10.1 and BC12–BC20). The Standard also preserves industry measurement exceptions for agricultural/forest/mineral producers and broker‑traders (paragraphs 3–5), and requires agricultural produce harvested from biological assets to be measured at fair value less costs to sell on initial recognition (paragraph 20). Transition provisions require prospective application and an opening retained earnings adjustment for NFPs (Aus42.1–Aus42.2 and BC21)."},"complexity_factors":["Multiple measurement bases and exceptions (lower of cost and NRV; cost adjusted for loss of service potential for NFPs; fair value less costs to sell for agricultural produce) — paragraphs 9, Aus9.1, 20","Judgement‑heavy assessments (NRV estimates, loss of service potential for NFPs, allocation of overheads) — paragraphs 12–14, 28–33, Aus9.2, BC17","Several permitted cost formulas and rules for when each is appropriate (specific identification, FIFO, weighted average) and consistency requirements — paragraphs 23–27","Industry carve‑outs that change measurement obligations for some entities (agriculture, minerals, broker‑traders) — paragraphs 3–5, 20","Extensive disclosure requirements including justification of bases used (general and NFP‑specific disclosures) — paragraph 36 and Aus36.1(h)","Interactions with other Accounting Standards requiring coordinated application (AASB 13, 14X/15/16/1058/123 referenced) — paragraphs 2(c), 6, 20, effective‑date notes","Transition mechanics and prospective adjustments for NFPs (opening retained earnings adjustment; comparatives not restated) — Aus42.1–Aus42.2 and BC21","Practical record‑keeping burdens identified in the Basis for Conclusions (need to maintain multiple price records and reversal support) — BC9"],"plain_english_summary":"What this instrument changes, mechanically\n\n- This Standard sets the accounting rules for measuring, recognising and disclosing inventories in general-purpose financial statements. The basic mechanical rule is: measure inventories at the lower of cost and net realisable value (NRV) (paragraph 9). When inventories are sold, their carrying amount is recognised as an expense in the same period as the related revenue (paragraph 34).\n\nWho and what it covers\n\n- Applies to all inventories except financial instruments and biological assets at harvest (paragraph 2(b) and 2(c)) and subject to industry carve-outs for producers of agricultural/forest products, minerals and commodity broker-traders that follow established industry measurement practices (paragraphs 3–5). Agricultural produce harvested from biological assets is measured at fair value less costs to sell at the point of harvest and that amount is treated as the cost for applying this Standard (paragraph 20).\n\nKey mechanical rules and choices required of reporting entities\n\n- Components of cost: inventories’ cost comprises costs of purchase, conversion and other costs necessary to bring inventories to their present location and condition (paragraph 10). Specific breakdowns and examples are in paragraphs 11–18 (purchase costs, conversion costs, excluded costs, borrowing costs).\n\n- Cost assignment methods: specific identification for non‑interchangeable items (paragraphs 23–24); otherwise FIFO or weighted average must be used and applied consistently across inventories of a similar nature and use (paragraphs 25–27).\n\n- Impairment/write-downs: inventories are written down to NRV when cost is not recoverable (paragraphs 28–33). Write-downs are recognised as an expense when they occur; reversals are allowed up to the original write-down amount if NRV recovers (paragraphs 33–34).\n\nSpecial rules for not‑for‑profit entities\n\n- Inventories held for distribution by not‑for‑profit (NFP) entities are measured at cost, adjusted when applicable for any loss of service potential, instead of the lower of cost and current replacement cost (Aus9.1 and Aus10.1). The Standard requires the entity to use judgement to identify the appropriate basis for assessing loss of service potential (Aus9.2) and permits a practical expedient to recognise donated/low‑cost inventories at current replacement cost when consideration is significantly less than fair value (Aus10.1–Aus10.2).\n\nDisclosure and reporting obligations\n\n- Entities must disclose the accounting policies used, total carrying amounts and classifications, inventories recognised as expense, any write‑downs and reversals, and inventories pledged as security (paragraph 36). Not‑for‑profit entities have parallel disclosure requirements that include the basis for assessing loss of service potential (Aus36.1(h)).\n\nWhy the Standard says it exists (official purpose claims)\n\n- The Standard’s stated objective is to prescribe how to determine the cost of inventories and how to recognise that cost as an asset until related revenues are recognised; it also aims to provide guidance on write‑downs to NRV and on cost formulas (paragraph 1). The Basis for Conclusions explains that the NFP measurement change was intended to give accounting information that better reflects NFPs’ service objectives and to address practical difficulties with replacement‑cost measurement for long‑held distribution inventories (BC12–BC20).\n\nHow the rules create incentives, costs and trade‑offs (what the Standard concretely does)\n\n- Who pays: reporting entities (for‑profit and not‑for‑profit) bear the compliance and measurement costs because they must implement measurement algorithms, keep supporting records and make estimates required by the Standard (see paragraphs 9, 10, 11–18, 23–27 and the disclosure requirements in paragraph 36).\n\n- Who decides: management of each reporting entity chooses cost formulas (FIFO or weighted average, or specific identification where required) and makes judgement calls on NRV and, for NFPs, on the appropriate basis for loss of service potential (paragraphs 25–27; Aus9.2; BC17). Those choices affect reported carrying amounts and expense recognition (paragraphs 9 and 34).\n\n- Compliance burden and implementation risk: the Standard requires estimates (NRV, replacement cost, allocation of fixed/variable overheads) and record‑keeping to support write‑downs and reversals, including tracking the circumstances that led to a write‑down (paragraphs 12–14; 28–33; BC9). The Basis for Conclusions notes practical burdens such as maintaining historic cost, current replacement cost and prior carrying amounts where replacements are infrequent (BC9). Judgment areas (NRV, service potential assessment for NFPs) create estimation risk and a need for documented policies and disclosures (paragraphs 30–33; Aus9.2; Aus36.1(h)).\n\n- Interaction and opportunity cost: the Standard cross‑references or defers to other accounting Standards in specific areas (AASB 141 for agriculture, AASB 13 on fair value, AASB 15/AASB 1058 for certain revenues and donated or low‑cost inventories, AASB 16 for leases and AASB 123 for borrowing costs), so implementation often requires coordination across rules (paragraphs 2(c), 20, 6 and effective‑date notes 40E–40G). That coordination increases preparer effort and can create timing/transition choices (Aus42.1–Aus42.2).\n\n- Effects on private enterprise and market signals: the Standard does not set prices or constrain competition directly; it prescribes how inventories are measured and disclosed for financial reporting. Measurement choices (cost formula, write‑downs) change reported cost of goods sold and reported profit in a period (paragraphs 25–27 and 34). For sectors with industry measurement practices (agriculture, commodities), permitted alternative measurements mean reported figures may differ from entities that follow the general rule (paragraphs 3–5 and 20).\n\nConcentrated benefits, substitution effects and control points\n\n- Concentrated benefits: entities with industry carve‑outs (producers of agricultural/forest products, minerals, commodity broker‑traders) can continue to use established measurement practices rather than applying the general measurement rules (paragraphs 3–5 and 20), which limits preparer cost for those industries.\n\n- Substitution effects: choice of cost formula (FIFO vs weighted average) and judgements about NRV and loss of service potential for NFPs can alter the timing of expense recognition without changing underlying physical inventory flows (paragraphs 25–27; Aus9.2). That changes accounting results and reporting volatility.\n\nImplementation and transition mechanics\n\n- Effective dates and transitional rules are specified: the compiled Standard applies to periods beginning on or after 1 January 2018 with later compiled amendments effective from 1 January 2022; not‑for‑profit entities apply the NFP inventory measurement prospectively with an opening adjustment to retained earnings rather than restating comparatives (paragraph 40; Aus42.1–Aus42.2).\n\nNet effect in plain terms\n\n- The Standard defines how to measure inventory cost, when to write it down, what costing methods are allowed, and what disclosures must be made. It establishes special measurement and disclosure treatments for not‑for‑profit entities, and preserves established industry practices for certain producers and broker‑traders. It shifts several practical judgements and record‑keeping burdens onto preparers, while requiring transparency about the policies and bases used (see paragraphs 9–10, 11–18, 23–33, 34, 36 and Aus9.1, Aus10.1, Aus36.1, BC9 and BC17)."},"flash_summary_failed":{"failed":true,"reason":"Unauthenticated. Configure AI_GATEWAY_API_KEY or use a provider module. Learn more: https://ai-sdk.dev/unauthenticated-ai-gateway","source":"analysis-cron"}},"importantCases":[],"_links":{"self":"/api/acts/aasb-102-inventories-july-2015","history":"/api/acts/aasb-102-inventories-july-2015/history","analysis":"/api/acts/aasb-102-inventories-july-2015/analysis","conflicts":"/api/acts/aasb-102-inventories-july-2015/conflicts","importantCases":"/api/acts/aasb-102-inventories-july-2015/important-cases","documents":"/api/acts/aasb-102-inventories-july-2015/documents"}}