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Accounting for inventory

Valuation of inventory

3.1 IAS 2 Inventories

IAS 2 Inventories requires that inventory should be valued at the lower of cost and
net realisable value (NRV) for each separate item or product.

The lower of:

Net realisable
Cost
value

All expenditure This includes the cost Revenue expected to
incurred to bring the of purchase, material be earned in the
product or service to costs, import duties, future when the goods
its present location freight and cost of are sold, less any
and condition. conversion. selling costs.

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