Inventory

A: Inventory is goods or materials held by a company for sale in the ordinary course of business, raw materials used in production, work-in-process, or finished goods ready for sale. Inventory is a current asset on the balance sheet.

A: Inventory is valued on the balance sheet at the lower of cost or net realizable value (LCNRV). Net realizable value is the estimated selling price less estimated costs of completion and costs necessary to make the sale.

A: Permitted methods under IFRS are: FIFO (First-In, First-Out) and Weighted Average Cost. The LIFO (Last-In, First-Out) method is prohibited under IFRS but permitted under US GAAP with specific disclosures.

A: Inventory is counted either periodically (physical count at period end) or perpetually (balances updated continuously with each sale and purchase). Book balances are reconciled with physical counts and any differences are recorded.

A: An inventory write-down means the carrying value of inventory exceeds its net realizable value. Inventory is written down to net realizable value, and the difference is charged as an expense (inventory impairment loss) on the income statement.