October 13, 2011
330 Inventory 10 Overall
Note: General Note The Status Section identifies changes to this Subtopic resulting from Accounting Standards Updates. The Section provides references to the affected Codification content and links to the related Accounting Standards Updates. Nonsubstantive changes for items such as editorial, link and similar corrections are included separately in Maintenance Updates.
330-10-00-1 330- 10-00No updates have been made to this subtopic.
330-10-05 Overview and Background
Note: General Note The Overview and Background Section provides overview and background material for the guidance contained in the Subtopic. It does not provide the historical background or due process. It may contain certain material that users generally consider useful to understand the typical situations addressed by the standards. The Section does not summarize the accounting and reporting requirements.
330-10-05330-10-05-1 The Inventory Topic addresses the accounting principles and reporting practices applicable to inventory.
330-10-05330-10-05-2 An inventory has financial significance because revenues may be obtained from its sale, or from the sale of the goods or services in the production of which it is used. Normally such revenues arise in a continuous repetitive process or cycle of operations in which goods are acquired, created, and sold, and further goods are acquired for additional sales. 330-10-05330-10-05-3 Thus, the inventory at any given date is the balance of costs applicable to goods on hand remaining after the matching of absorbed costs with concurrent revenues. This balance is appropriately carried to future periods provided it does not exceed an amount properly chargeable against the revenues expected to be obtained from ultimate disposition of the goods carried forward. In practice, this balance is determined by the process of pricing the articles included in the inventory.
Note: General Note The Objectives Section provides the high-level objectives that the Subtopic is intended to accomplish or attain. The Section does not summarize or discuss the main principles of accounting and reporting requirements.
330-10-10330-10-10-1 A major objective of accounting for inventories is the proper determination of income through the process of matching appropriate costs against revenues.
330-10-15 Scope and Scope Exceptions
Note: General Note The Scope and Scope Exceptions Section outlines the items (for example, the entities, transactions, instruments, or events) to which the guidance in the Subtopic does or does not apply. In some cases, the Section may contain definitional or other text to frame the scope.
> Overall Guidance
The Scope Section of the Overall Subtopic establishes the pervasive scope for the Inventory Topic.
The guidance in the Inventory Topic applies to all entities, with the following qualifications. The guidance in this Topic is not necessarily applicable to the following entities:
a. Not-for-profit entities (NFPs) b. Regulated utilities.
Note: General Note The Master Glossary contains all terms identified as glossary terms throughout the Codification. Clicking on any term in the Master Glossary will display where the term is used. The Master Glossary may contain identical terms with different definitions, some of which may not be appropriate for a particular Subtopic. For any particular Subtopic, users should only use the glossary terms included in the particular Subtopic Glossary Section (Section 20). Direct Effects of a Change in Accounting Principle Those recognized changes in assets or liabilities necessary to effect a change in accounting principle. An example of a
direct effect is an adjustment to an inventory balance to effect a change in inventory valuation...
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