Inventory valuation – IAS 2

Requirement

Inventories are to be valued at the lowest of acquisition cost and net sales value.

Acquisition cost value can be calculated using the FIFO method or the average method. Obsolescence adjustments from 2% to 5% are acceptable, depending on the industry. The net sales value is a part of the sales price or repurchase price.

M3 solution

M3 supports a specific period-end function that can be configured to fulfill the legal requirement regarding inventory valuation. For each inventory item, a specification of the calculated values is available online and an accounting adjustment voucher is created.

Configuration guidelines

Program ID	Program name	Description or comment
CAS020	Settings - Inventory Value Variances
CAS025	Settings. Inventory Valuation
CRS395	Accounting Rule. Set	Rules for accounting adjustments at the end of the period for inventory valuation
CRS630	Accounting Identity. Open	Accounts that are used for cost and value adjustments
CAS180	Inventory Value. Open	Valuation at the end of the period, with comparison of inventory cost and value
CAS400	Historic Actual Cost. Calculate