inventory valuation


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Inventory Valuation

In accounting, any way to estimate and report how much a company's inventory is worth. There are two primary ways to calculate inventory valuation. The first in, first out technique treats inventory acquired first as if it were sold first. That is, the sale of inventory is recorded against the purchase price of the oldest inventory, even if the physical goods are not the same. The last in, first out technique does the opposite: it records sales against the purchase price of the most recently acquired inventory. Both of these techniques are designed to estimate the value of inventory in a way that will decrease the company's tax liability while not reducing the book value of its assets.

inventory valuation

The cost assigned to inventory for the purpose of establishing its current value. Inventory valuation is determined according to the basis by which a firm assumes inventory units are sold. If the first units acquired are assumed to be the first units sold (first-in, first-out), costs of the last units purchased are used for valuing inventory remaining in stock. Conversely, if the last units acquired are assumed to be the first units sold (last-in, first-out), the costs of the first units purchased are used for valuing the inventory remaining in stock.
References in periodicals archive ?
16 Proprietors' income with inventory valuation 1,518.2 1,588.8
On the other hand, recognition of interim inventory valuation writedowns taken on the same inventory line items at interim reporting dates are generally required under GAAP to be restored in future interim periods if no longer applicable (ASC 270-1045-6).
Q4 GDP growth trimming to 2.5% from 2.6% undershot our estimate due to a $1.2 B downward inventory bump, as inventory valuation absorbed the hike in the inventory source data, alongside small boosts in exports and imports that left a $0.5 B hike in net exports, and a trimming in intellectual property investment.
Many leading hospital providers are already utilizing this solution to identify inventory waste and get a more accurate assessment of the inventory valuation.
"Japanese refiners will experience a second consecutive year of large inventory valuation losses, because of the slide in global oil prices over the last 18 months," says Kailash Chhaya, a Moody's Vice President and Senior Analyst.
Taipei, May 9, 2012 (CENS) -- Posting pretax profits of NT$708 million in April mainly on rising steel prices, lowering materials costs and improving losses on inventory valuation, China Steel Corp., the largest steelmaker in Taiwan, is likely to turn profitable in the second quarter of this year, according to institutional investors.
If the LIFO (last in, first out) method of inventory valuation is used, the value of inventory will likely be carried at below market value.
He addresses data entry for inventory transactions, tracking inventory through different types of manufacturing environments, key control points and related fraud problems, several dozen measurements, several report formats, budgeting for inventory, and inventory valuation.
Traditional accounting and financial control systems (including budgeting, inventory valuation, overhead allocations, cost accounting, and financial reporting) have emerged as significant barriers to deep implementation of lean practices.
Lines 18, Part III and 34, Part IV, are both described as inventory valuation adjustments.
An automobile dealer that uses the safe-harbor method must maintain records supporting all aspects of its inventory valuation, including a price list.