What is Inventory? — Recording and valuation
Inventory refers to goods, raw materials and finished products a business holds for sale or use in production. They are current assets on the balance sheet.
Definition
Inventory refers to goods, raw materials and finished products a business holds for sale or use in production. They are current assets on the balance sheet.
Details
Valuation methods: FIFO (first in — first out), weighted average cost. LIFO is not permitted under IFRS. Physical inventory count is mandatory at least once yearly (year-end). Differences (shortages/surpluses) are recorded as expense or revenue.
Example
Trading company: inventory at 31.12 — 500 units × average price 200 MKD = inventory value 100,000 MKD on the balance sheet.