imperment
Annals of the University of Petroşani, Economics, 11(4), 2011, 183-190
183
SOME ASPECTS REGARDING IMPLICATIONS OF IAS 2
"INVENTORY" IN ROMANIAN ACOUNTING
ALIN MONEA *
ABSTRACT: This paper presents some aspects regarding inventories. In many business inventories are the most important assets. The accounting for inventories is a major consideration for many entities because of its significance on both the income statement (cost of goods sold) and the statement of financial position. The complexity of accounting for inventories arises from several factors like: the high volume of activity, the various cost flow alternatives that are acceptable and the classification of inventories.
KEY WORDS: inventories; assets; realizable value; cost of purchase; cost of inventories JEL CLASSIFICATION: M41; M48; H22; K34.
1. INTRODUCTION
Inventories are assets held for sale in the ordinary course of business, in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services.
Inventories shall be measured at the lower of cost and net realizable value.
The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of finished goods, materials and services. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
The costs of conversion of inventories include costs directly related to the units of production, such as direct labor. They also include a systematic allocation of fixed
*
Lecturer, Ph.D., University of Petroșani, Romania,
183
SOME ASPECTS REGARDING IMPLICATIONS OF IAS 2
"INVENTORY" IN ROMANIAN ACOUNTING
ALIN MONEA *
ABSTRACT: This paper presents some aspects regarding inventories. In many business inventories are the most important assets. The accounting for inventories is a major consideration for many entities because of its significance on both the income statement (cost of goods sold) and the statement of financial position. The complexity of accounting for inventories arises from several factors like: the high volume of activity, the various cost flow alternatives that are acceptable and the classification of inventories.
KEY WORDS: inventories; assets; realizable value; cost of purchase; cost of inventories JEL CLASSIFICATION: M41; M48; H22; K34.
1. INTRODUCTION
Inventories are assets held for sale in the ordinary course of business, in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services.
Inventories shall be measured at the lower of cost and net realizable value.
The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
The costs of purchase of inventories comprise the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of finished goods, materials and services. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase.
The costs of conversion of inventories include costs directly related to the units of production, such as direct labor. They also include a systematic allocation of fixed
*
Lecturer, Ph.D., University of Petroșani, Romania,
References: [1]. Epstein, B.; Jermakovicz, E. (2010) Interpretation and Application of International Financial Reporting Standards, Ed [2]. Nedels, B.; Powers, M.; Crosson, S. (2008) Financial and Managerial Accounting, Ed. [4]. Cotleț, D.; Megan, O.; Pistol, I. (2007) Raportările financiare ale entităților economice, Editura Mirton, Timișoara [5]. Megan, O. (2006) Adopting European Union Accounting Directives – a new challenge for Romanian managers”, Simpozionul internaţional „Strategijki Menadzment”, mai 2006,