Accounting treatments for inventories mesurements in IAS 2 Inventories
8/2004 , p76..85
Author(s):
Nicolae TRAIAN
Keywords:
inventories, net realizable value, FIFO, weighted average cost, cost measurement
Abstract:
The article analyzes the requirements of IAS 2, such as: initial and subsequent measurement of inventories, the way of writing-down to net realizable value and the determination of cost using different formulas as First in First Out or weighted average cost. IAS 2 allows that, in certain circumstances, the differences determined by the monetary exchange should be include into the acquisition cost, as the permitted treatment of IAS 21 The effects of changes in foreign exchange rates. Thus, an exchange loss on foreign currency debt used to finance the acquisition of an asset may be added to the carrying amount of the asset if the loss results from a severe devaluation of a currency against which there is no practical means of hedging.The described requirements are accompanied by eloquent examples.
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