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Berry Plastics is a manufacturer. Berry has inventory consisting of raw materials, work in process and...

Berry Plastics is a manufacturer. Berry has inventory consisting of raw materials, work in process and finished goods totaling $24 million. Is Berry required to report the amounts for each class of inventory or can it just report the total of $24 million?

You must provide Codification references to support your answer!

You answer should be in the FIRAC format

Facts Issue(s)(typically a question)

Review of authoritative literature (ASC)

Analysis (link the facts to the authority)

Conclude (answer the issue question)

Solutions

Expert Solution

Fact: Berry Plastics, a manufacturer is reporting its inventory in financial reports. It has inventory worth $24 million which consists of raw materials, work in progress and finished goods.

Issue: Berry Plastics requires to know whether the amount of inventory is to be reported for each class of inventory separately or whether a single consolidated figure can be reported.

Review: As per Para 36 of IAS - 2, Inventories, "the financial statements shall disclose the total carrying amount of the inventory and carrying amount in classifications appropriate to the entity". Further, as per para 37, "commpn classifications of inventory are merchandise, production supplies, materials, work in progress and finished goods."

Analysis: In the given scenario, Berry Plastics is a manufacturer and has inventory which consists of 3 different classifications namely, raw material, work in progress and finished goods. Application of aforementioned paras of the IAS 2 mandates the split of inventory into further classifications. Hence the amount of inventory should be reported for each class of inventory

Conclusion: Berry Plastics should report the amount for each class of inventory along with the consolidated amount of inventory instead of reporting just the total of $24 million

ekkarill92 answered 1 year ago
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