United States

FASB Changes Measurement Principle for Inventory

Jul 23, 2015
From the Financial Reporting Network

This edition of Defining Issues reports that the FASB recently issued an Accounting Standards Update that changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The new principle is part of the FASB’s simplification initiative and applies to entities that measure inventory using a method other than last-in, first-out (LIFO) or the retail inventory method (e.g., first-in, first-out (FIFO), average cost).

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