IAS 2 INVENTORIES : COST OF INVENTORIES

3. COST OF INVENTORIES

A key issue in accounting for inventories is the amount of cost to be recognised as an asset and carried forward until the related revenues are recognised.

The cost of inventories comprises all costs of production, costs of conversion, and other costs incurred in bringing the inventories to their present location and condition.

Example: repackaging costs You are a wholesaler. You repackage goods for clients. The repackaging costs are included in your inventory.
	I/B	DR	CR
Repackaging costs	I		2.000
Inventory	B	2.000
Transfer of repackaging costs to inventory