Measurement of InventoriesMeasurement of Inventories

Measurement of Inventories

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

Aus9.1 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.

Aus9.2 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.