Question

Where in the Codification does it state that the SEC requires the disclosure, either in the balance sheet or in the notes, of the amounts of major classes of inventory such as finished goods, inventoried costs relating to long-term contracts or programs, work in process, raw materials, etc.?

Answer 1

Security and Exchange Commission requires following disclosure regarding major classes of Inventory:

Section-210.5-02 Balance Sheet:

This section includes disclosure of all different line items along with related disclosures, if applicable unless it is permitted by SEC. Inventory should be disclosed under the line item "Current Assets" in the head of Assets of Balance Sheet.

Therefore, in Section-210.5-02.6, SEC requires that

(a) It should be stated separately either in the balance sheet or in the notes, of the amount of major classes of inventory such as finished goods, inventory costs relating to long-term contracts or programs, work in process, raw material, and supplies etc.

(b) It should also be disclosed the basis of determining the cost of inventory.

(c) If there is any difference between the replacement cost or current cost with the value as determined by the LIFO basis of determining the cost then it should also be disclosed in related notes to accounts in financial statement.

(d) If there is any long-term contract then following should also be disclosed in related notes to account of financial statements:

a) Total manufacturing cost incurred till date and the cost which is deferred under the long-term contract which is not yet completed.

b) Any amount of claim regarding the long-term claims which is subject to any kind of uncertainity or contingent.

c) Any progress payment which is adjusted against the inventory at the balance sheet date.