Question

How do I cite IAS 2 inventories and FASB 330 topic? It needs to be in the Chicago style.

This is what I came up with:

IAS (International Accounting Standards). plus.com. 2015. IAS 2 — /ias/ias1>

IAS 2, "Inventories"

FASB (Financial Accounting Standards Board). (2015 July). Accounting Standards Update (ASU) No. 2015-11 Inventory (Topic 330)

Answer 1

The objective of IAS 2 is to prescribe the accounting treatment for inventories.

Inventories include assets held for sale in the ordinary course of business (finished goods), assets in the production process for sale in the ordinary course of business (work in process), and materials and supplies that are consumed in production (raw materials). [IAS 2.6]

However, IAS 2 excludes certain inventories from its scope: [IAS 2.2]

• work in process arising under construction contracts (see IAS 11 Construction Contracts)
• financial instruments (see IAS 39 Financial Instruments: Recognition and Measurement)
• biological assets related to agricultural activity and agricultural produce at the point of harvest (see IAS 41 Agriculture).

Fundamental principle of IAS 2

Inventories are required to be stated at the lower of cost and net realisable value (NRV)

Measurement of inventories

Cost should include all: [IAS 2.10]

• costs of purchase (including taxes, transport, and handling) net of trade discounts received
• costs of conversion (including fixed and variable manufacturing overheads) and
• other costs incurred in bringing the inventories to their present location and condition

IAS 23 Borrowing Costs identifies some limited circumstances where borrowing costs (interest) can be included in cost of inventories that meet the definition of a qualifying asset. [IAS 2.17 and IAS 23.4]

Inventory cost should not include: [IAS 2.16 and 2.18]

• abnormal waste
• storage costs
• administrative overheads unrelated to production
• selling costs
• foreign exchange differences arising directly on the recent acquisition of inventories invoiced in a foreign currency
• interest cost when inventories are purchased with deferred settlement terms

Disclosure

Required disclosures: [IAS 2.36]

• accounting policy for inventories
• carrying amount, generally classified as merchandise, supplies, materials, work in progress, and finished goods. The classifications depend on what is appropriate for the entity
• carrying amount of any inventories carried at fair value less costs to sell
• amount of any write-down of inventories recognised as an expense in the period
• amount of any reversal of a write-down to NRV and the circumstances that led to such reversal
• carrying amount of inventories pledged as security for liabilities
• cost of inventories recognised as expense (cost of goods sold).