InventoriesInventories

Inventories

B25 Inventories are measured for interim financial reporting by the same principles as at the end of an annual reporting period. AASB 102 Inventories establishes standards for recognising and measuring inventories. Inventories pose particular problems at the end of any financial reporting period because of the need to determine inventory quantities, costs, and net realisable values. Nonetheless, the same measurement principles are applied for interim inventories. To save cost and time, entities often use estimates to measure inventories at interim dates to a greater extent than at the end of annual reporting periods. Following are examples of how to apply the net realisable value test at an interim date and how to treat manufacturing variances at interim dates.

Net Realisable Value of Inventories

B26 The net realisable value of inventories is determined by reference to selling prices and related costs to complete and dispose at interim dates. An entity will reverse a write-down to net realisable value in a subsequent interim period only if it would be appropriate to do so at the end of each annual reporting period.

B27 [Deleted by the IASB]

Interim Period Manufacturing Cost Variances

B28 Price, efficiency, spending, and volume variances of a manufacturing entity are recognised in income at the end of interim reporting periods to the same extent that those variances are recognised in income at the end of an annual reporting period. Deferral of variances that are expected to be absorbed by the end of the annual reporting period is not appropriate because it could result in reporting inventory at the interim date at more or less than its portion of the actual cost of manufacture.