IFRS Learning Module 4: Inventories (Course Id 365)

Accounting - Accounting for Course Id 365

IFRS Learning Modules are a series of courses that provide in-depth overviews of various topics related to International Financial Reporting Standards (“IFRS”). IFRS represents the global accounting principles that provide the foundation for most of the world’s financial reporting. These Standards establish the recognition, measurement, presentation and disclosure requirements for transactions and events reflected in IFRS financial statements.

The growing acceptance of IFRS as a basis for U.S. financial reporting represents a fundamental change for the U.S. accounting profession. The International Accounting Standards Board (IASB) and their U.S. equivalent (the FASB) have made commitments towards the convergence of U.S. GAAP and IFRS and are working to eliminate as many differences between the two Standards as possible. In addition, the Securities and Exchange Commission has endorsed the outright adoption of IFRS in the United States. Therefore it is clear that IFRS represents the future of financial accounting and reporting in the United States.

Module 4 of the IFRS Learning Module series presents an overview of IAS 2 Inventories, the accounting standard for classifying and measuring inventories in IFRS financial statements. This module also discusses the IASB’s and FASB’s efforts towards achieving convergence in this area of financial reporting.

NASBA QAS - Text - Technical - NASBA Registry - 365

Module Learning Objectives

• Identify major classifications of inventory.
  
• Distinguish between perpetual and periodic inventory systems.
  
• Describe the items to include as inventory cost.
  
• Describe and compare the formulas used to measure inventories in IFRS financial statements.
  
• Explain when reporting entities measure inventories at net realizable value in IFRS financial statements.
  

Module 4:  Inventories

1.0   Introduction to IAS 2

1.1   Objective

1.2   Scope

2.0   Inventory Classifications

2.1   Raw materials inventory

2.2   Work in process inventory

2.3   Finished goods inventory

3.0   Inventory Systems

3.1   Perpetual inventory system

3.2   Periodic inventory system

4.0   Measurement of Inventories (Part 1)

4.1   Items included in inventory

4.2   Costs includes in inventory

5.0   Measurement of Inventories (Part 2)

5.1   Introduction to inventory cost formulas

5.2   Specific identification formula

5.3   Average cost formula

5.4   First-in, first-out (FIFO) formula

6.0   Measurement of Inventories (Part 3)

6.1   Net realizable value

6.2   Inventory write-downs

7.0   Disclosures

8.0   IFRS & U.S. GAAP Convergence

8.1   Key differences between IFRS and U.S. GAAP � Inventories

8.2   Last-in, first-out (LIFO) cost formula

9.0   Module Summary

Glossary