ScopeScope

Scope

2 This Standard applies to all inventories, except:

(a) [deleted by the IASB]

(b) financial instruments (see AASB 132 Financial Instruments: Presentation and AASB 9 Financial Instruments); and

(c) biological assets related to agricultural activity and agricultural produce at the point of harvest (see AASB 141 Agriculture).

Aus2.1 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.

3 This Standard does not apply to the measurement of inventories held by:

(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; and

(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.

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.

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.