FASB: Measurement principle for inventory, revised

FASB: Measurement principle for inventory, revised

The FASB issued an Accounting Standards Update (ASU) that changes the measurement principle for inventory from the "lower of cost or market" to "lower of cost and net realizable value."

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The new principle is part of the FASB's simplification initiative and applies to entities that measure inventory using a method other than last-in, first-out (LIFO) or the retail inventory method (e.g., first-in, first-out (FIFO), average cost).

Read a July 2015 report [PDF 582 KB] prepared by KPMG LLP: Defining Issues: FASB Changes Measurement Principle for Inventory

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