VALUATION DURING INVENTORY COUNT (IAS 2)

All topics related to IFRS Standards.
Post Reply
Farhan Ahmed
Posts: 2
Joined: 01 Jan 2021, 16:45

VALUATION DURING INVENTORY COUNT (IAS 2)

Post by Farhan Ahmed »

Hi Everyone,

I have a query related to the IAS 2 (Inventory).

Currently we have applied FIFO Method on the basis of Product Expiry Date for the inventory movement in our Warehouse. But lets suppose if we do a Cycle Count of Inventory and found some of the products aren't appearing/available in the Inventory Software, so how can we re-enter those homogenous products (interchangeable inventory) if we are unable to trace their exact cost (i.e. exact cost on which we have purchased those items).

Do you think that it will be appropriate in terms of IFRS/IAS if we re-enter those products on the basis of Weighted Average? Or do you think it will be appropriate to re-enter those products on Last Cost Updated in the Inventory Software?

Please suggest the appropriate method considering the fact that we are currently on FIFO Method. So I am confused that is it appropriate to use the Weighted Average meanwhile the FIFO just to enter some of the products back in the Inventory Software.

Waiting for the response.
JRSB
Trusted Expert
Posts: 1308
Joined: 01 Mar 2020, 01:10
Location: UK

Re: VALUATION DURING INVENTORY COUNT (IAS 2)

Post by JRSB »

I don't think there'll be an IFRS answer, so maybe it's what most appropriate in that case. You mention it's a product with an expiry date, so the stuff you found must have expiry dates that you can trace to purchases at the time? What is the inventory?
Farhan Ahmed
Posts: 2
Joined: 01 Jan 2021, 16:45

Re: VALUATION DURING INVENTORY COUNT (IAS 2)

Post by Farhan Ahmed »

Actually some of the products were added previously in the inventory with the incomplete data like without Expiry Date or Batch Number. That's why it will be a hurdle to trace back. As far as we've sought out a way is that we can find Average Cost of the same SKU or Product and added back the remaining in the inventory with the Average Cost or otherwise we simply added back while considering the Last Cost Price of the same SKU.

Moreover, the products are mostly FMCG (Fast Moving Consumer Goods). And why I am seeing/asking this in context of IFRS/IAS is because as I mentioned that currently we are following FIFO Method so my point is that is it appropriate to add some of products back in the inventory with Weighted Average or Last Cost Price (I mean here we will negate the FIFO Method if we go with the Weighted Average or Last Cost Price option).
Post Reply