4.1 IAS 2 Inventories

This is the first time that you will be required to consider the impact of the relevant International Financial Reporting Standards （IFRSs） on the valuation and presentation of an item in the accounts： IAS 2 Inventories． Although you are not required to prepare financial statements for listed companies until Chapter 12， you will begin to study the requirement of IFRSs gradually from this chapter． IAS 2 Inventories lays out the required accounting treatment for inventory．

Inventory is one of the most important assets in a company's statement of financial position．IAS 2 Inventories gives the following important definitions．

Inventories are assets：

·Held for sale in the ordinary course of business．

·In the process of production for such sale．

·In the form of materials or supplies to be consumed in the production process or in the rendering of services．

Inventories may include any of the following：

·Goods purchased and held for resale．

· Finished goods which have been made by the business but not yet sold．

· Work in progress being produced （part completed items）．

· Raw materials or components bought from suppliers． 7sciFcPOvp5RhFxqv2V+aAbK1jZinMvdPOLvVwiKlKTAEy16KDGFIrWL0SMN7d2i