IFRS - IAS 2: Inventories

IFRS Guide > IAS 2

The International Accounting Standards Committee (IASC) released International Accounting Standard 2 (IAS 2) to address the topic of inventories. Accounting for inventories is something in which is important to investors in certain industries as it helps evaluate the business on several levels. Different methods have been introduced to display the movement of inventory, as well as determine the value of it.

The cost of inventory is important to the financial statements as it is offset against the revenues of the product on the P&L. These can also pose important parts of a balance sheet in the form on an asset and thus be a predictor of future earnings. If this inventory is impaired for any reason, it is often written down.

IAS are principles based standards, rather than strict rules based standards that govern international accounting. IAS standards differ from IFRS standards in that they were introduced prior to 2001, whereas IFRS were produced after this date by the IASB, or the International Accounting Standards Board. When determining the hierarchy of these, the IAS is considered to be the building blocks in which the newer and more relevant IFRS are founded and therefore IFRS is more authoritative when these conflict.

Check out more high level explanations of the IASB IFRS in our Guide to IFRS International Financial Reporting Standards!

VN:F [1.9.22_1171]
Rating: 0.0/10 (0 votes cast)

Enter you Email and Win!

Sign up for our drawing for an Apple IPhone to help you organize your business contacts, calendar events, and more, by subscribing to our periodic newsletter. Simply add your email below and you will be enrolled. We will never, ever sell or spam your email, and you can cancel at any time!

Cite this page:

Contribute meaningful comments to the Accounting community...