IAS 2 Inventories

The standard provides guidance on accounting for inventories. It defines inventories as assets held for sale, in production for sale, or materials used in production. Inventories must be measured at the lower of cost and net realizable value, with cost determined using purchase cost, conversion cost, or formulas like FIFO or weighted average. If net realizable value falls below cost, inventories must be written down with the loss recognized in profit or loss. Entities must disclose information about inventory accounting policies, measurements, and write-downs.