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Commission Regulation (EC) No
2238/2004 of 29 December 2004 amending Regulation (EC) No 1725/2003
adopting certain international accounting standards in accordance
with Regulation (EC) No 1606/2002 of the European Parliament and of
the Council, as regards IASs IFRS 1, IASs Nos 1 to 10, 12 to 17, 19
to 24, 27 to 38, 40 and 41 and SIC Nos 1 to 7, 11 to 14, 18 to 27
and 30 to 33
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Recognition as an
Expense
34. When inventories
are sold, the carrying amount of those inventories shall
be recognised as an expense in the period in which the related
revenue is recognised. The amount of any write-down of
inventories to net realisable value and all
losses of inventories shall be recognised as an
expense in the period the write-down or loss occurs.
The amount of any reversal of any write-down of inventories,
arising from an increase in net realisable value, shall be
recognised as a reduction in the amount of inventories
recognised as an expense in the period in which
the reversal occurs.
35. Some inventories
may be allocated to other asset accounts, for example,
inventory used as a component of self-constructed property,
plant or equipment. Inventories allocated to another asset in
this way are recognised as an expense during the useful life
of that asset.
Disclosure
36. The financial
statements shall disclose:
(a) the accounting
policies adopted in measuring inventories, including
the cost formula used;
(b) the total
carrying amount of inventories and the carrying amount
in classifications appropriate to the entity;
(c) the carrying
amount of inventories carried at fair value less
costs
to sell;
(d) the amount of
inventories recognised as an expense during the
period;
(e) the amount of
any write-down of inventories recognised as an expense
in the period in accordance with paragraph 34;
(f) the amount of
any reversal of any write-down that is recognised
as a reduction in the amount of inventories recognised
as expense in the period in accordance with paragraph
34;
(g) the
circumstances or events that led to the reversal of a
write-down
of inventories in accordance with paragraph 34; and
(h) the carrying
amount of inventories pledged as security for liabilities.
37. Information
about the carrying amounts held in different classifications
of inventories and the extent of the changes in these assets
is useful to financial statement users. Common classifications
of inventories are merchandise, production supplies, materials,
work in progress and finished goods. The inventories of a
service provider may be described as work in progress.
38. The amount of
inventories recognised as an expense during the period, which
is often referred to as cost of sales, consists of those costs
previously included in the measurement of inventory that has
now been sold and unallocated production overheads and
abnormal amounts of production costs of inventories. The
circumstances of the entity may also warrant the inclusion of
other amounts, such as distribution costs.
39. Some entities
adopt a format for profit or loss that results in amounts
being disclosed other than the cost of inventories recognised
as an expense during the period. Under this format, an entity
presents an analysis of expenses using a classification based
on the nature of expenses. In this case, the entity discloses
the costs recognised as an expense for raw materials and
consumables, labour costs and other costs together with the
amount of the net change in inventories for the period.
Effective Date
40. An entity shall
apply this Standard for annual periods beginning onor after 1
January 2005. Earlier application is encouraged. If an
entity applies this Standard for a period beginning
before 1 January 2005, it shall disclose that
fact.
Withdrawal
of Other Pronouncements
41. This Standard
supersedes IAS 2 Inventories (revised in 1993).
42. This Standard
supersedes SIC-1 Consistency—Different Cost Formulas
for Inventories.
Appendix
Amendments to Other
Pronouncements
The amendments in
this appendix shall be applied for annual periods beginning
on or after 1 January 2005. If an entity applies this Standard
for an earlier period, these amendments shall be
applied for that earlier period.
A1. In IAS 14 Segment
Reporting, paragraph 22 is amended to read as follows:
22. Some guidance
for cost allocation can be found in other Standards. For
example, paragraphs 11-20 of IAS 2 Inventories (as
revised in 2003) provide guidance on attributing and
allocating costs to inventories, and paragraphs 16-21 of IAS
11 Construction Contracts provide guidance on
attributing and allocating costs to contracts. That guidance
may be useful in attributing or allocating costs to segments.
A2. [Amendment not
applicable to bare Standards]
A3. [Amendment not
applicable to bare Standards]
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