IAS 2 - Inventories
Financial Dictionary — IFRS & IAS Standards
Definition
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.
Use cases, Example & Why it matters
Use cases
- Used when applying IFRS/IAS requirements for recognition, measurement, presentation, or disclosure.
- Used to justify accounting treatments in working papers and financial statement notes.
- Used to justify accounting treatments in working papers and financial statement notes.
Example
- Example: When preparing year-end reporting, management applies **IAS 2 - Inventories** to determine the correct IFRS treatment and disclosures.
Why it matters
- Why it matters: Ensures compliance with IFRS, improves comparability across periods and entities, and reduces financial reporting risk.
Related terms
- IAS 1 - Presentation of Financial Statements
- IAS 10 - Events After the Reporting Period
- IAS 11 - Construction Contracts
- IAS 12 - Income Taxes
- IAS 16 - Property, Plant and Equipment
- IAS 17 - Leases
- IAS 18 - Revenue
- IAS 19 - Employee Benefits
- IAS 20 - Government Grants
- IAS 21 - Effects of Changes in Foreign Exchange Rates