FASB Simplifies Inventory Guidance

Thoughtware Article Published: Aug 07, 2015
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On July 22, 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-11, Inventory (Topic 330):  Simplifying the Measurement of Inventory. The standard simplifies the current “lower of cost or market” test by eliminating the multiple measures of “market.” Inventory would be measured as the lower of cost or net realizable value (NRV). NRV retains its current definition, “estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” This change more closely aligns U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards.

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