IAS 2 - Inventories

IAS 2 requires inventories to be measured at the lower of cost and net realizable value. It defines what costs may be included and how inventory should be allocated and expensed.

IAS 2 requires inventories to be measured at the lower of cost and net realizable value, and explains which costs are included and acceptable cost formulas such as FIFO or weighted average.

- Used when applying IFRS/IAS requirements for recognition, measurement, presentation, or disclosure.
- Used to justify accounting treatments in working papers and financial statement notes.

- Example: When preparing year-end reporting, management applies **IAS 2 - Inventories** to determine the correct IFRS treatment and disclosures.

- Why it matters: Ensures compliance with IFRS, improves comparability across periods and entities, and reduces financial reporting risk.