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What is the perveived strenghts and perceived weaknessess with respect to IAS2:  Inventories
in IAS 2 - Inventories by

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We understand that as per the IAS 2, the inventory is valued at lower of cost or net realizable value. 

The cost factor in this case includes cost of purchase and all other cost that has been incurred in bringing the asset to the current location. The method that has been used in valuation of inventory has been criticized negatively. Experts stated that the net realizable value should not be considered at times of valuing the inventory. They state that the cost of the inventory should be the only criteria.

One of the positive critique is that the standard has removed concept of valuation on basis of Historic cost, which becomes irrelevant over a period of time. Also the standard does not apply to WIP under construction contracts,  Financial Instruments, Agricultural inventories and Biological assets related to agricultural activity.

by Level 4 Member (7.6k points)


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