13. DISCLOSURE
The financial
statements shall disclose:
(i)
the
accounting policies adopted in measuring inventories, including the cost
formula used;
(ii)
the
total carrying amount of inventories and the carrying amount in classifications
appropriate to the entity;
(iii)
the
carrying amount of inventories carried at fair value less costs to sell;
(iv)
the
amount of inventories recognised as an expense during the period;
(v)
the
amount of any write-down of inventories recognised as an expense in the period;
(vi)
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;
(vii)
the
circumstances or events that led to the reversal of a write-down of
inventories; and
(viii)
the
carrying amount of inventories pledged as security for liabilities.
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.
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.
Some entities adopt a
format for the income statement that results in amounts being disclosed other
than the cost of inventories recognised as an expense during the period.
|
|
2002
|
2001
|
|
Sales
|
211.034
|
112.360
|
|
Other operating
income
|
6.301
|
2.195
|
|
Changes in
inventories of finished goods and work in progress
|
1.972
|
2.309
|
|
Raw materials and
consumables used
|
(66.173)
|
(40.912)
|
|
Staff costs
|
(40.090)
|
(15.500)
|
|
Depreciation and
amortisation
|
(35.238)
|
(13.064)
|
|
All other operating
expenses
|
(32.088)
|
(12.435)
|
|
Loss on sale of
discontinuing operation
|
(959)
|
–
|
|
Total operating
expenses
|
(172.576)
|
(79.602)
|
|
Profit from
operations
|
44.759
|
34.953
|
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.
Sample Accounting Policy and Note
(taken from
Illustrative Corporate Financial Statements 2002, PWC)
Inventories
Inventories are stated
at the lower of cost or net realisable value. Cost is determined using the
first-in, first-out (FIFO) method.
The cost of finished
goods and work in progress comprises raw materials, direct labour, other direct
costs and related production overheads (based on normal operating capacity) but
excludes borrowing costs.
Net realisable value
is the estimated selling price in the ordinary course of business, less the
costs of completion and selling expenses. Costs of inventories includes the
transfer from equity of gains/losses on qualifying cash flow hedges relating to
inventory purchases.
Illustrative Corporate
Financial Statements
ABC Group – Year ended
31 December 2002
Inventories and assets
held for sale
|
Inventories
|
2002
|
2001
|
|
|
|
|
|
Raw materials (at
cost)
|
7.622
|
7.612
|
|
Work in progress (at
cost)
|
1.810
|
1.796
|
|
Finished goods (at
cost)
|
9.888
|
7.920
|
|
Finished goods (at
net realisable value)
|
402
|
412
|
|
|
19.722
|
17.740
|
Inventories of $109
(2001 : $ 223) have been pledged as security for borrowings.
In July 2001 the Group
reversed $ 603) being part of an inventory write down made in December 2000
that was subsequently not required.
|
Property, plant and
equipment held for sale
|
2002
|
2001
|
|
Land and buildings
|
1.810
|
3.002
|
|
Plant and machinery
|
1.226
|
–
|
|
Computer equipment
|
630
|
–
|
|
|
3.666
|
3.002
|
As a consequence of
the restructuring of the paints segment, certain items of property, plant and
equipment are no longer required for the purposes for which they were originally
purchased. These assets have been written down by $ 775 to their estimated recoverable
amounts.
gud
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