Accounting for inventory - 5 things you need to know

Many companies hold inventory, and the accounting can be complex. It’s not surprising that “inventory” is one of the most searched terms on our website, but help is on the way. Pat Durbin is again with us in the studio joining Heather Horn to take us back to the basics on accounting for inventory including: 1:07 - Scope. We kick things off with a discussion of scope of the guidance and an overview of the general principles. 3:22 - Elements of cost. Pat discusses what types of costs would qualify (and not qualify) for capitalization in inventory. 10:53 - Accounting changes. What if you want to change inventory accounting methods? Pat shares some important considerations. 12:53 - Lower of cost and net realizable value. In this segment, we discuss the ongoing valuation considerations for inventory.15:24 - Common questions. Before wrapping up, we address some common questions including accounting for vendor rebates and consignment arrangements.About our guestAs the leader of the revenue and liabilities division in PwC’s national office, Pat Durbin leads a team of partners and directors responsible for consulting with our clients and engagement teams on complex accounting matters relating to revenue, compensation, income taxes, inventory and several other topics under both US GAAP and IFRS. In addition to client-specific matters, he and his team monitor the activities at the FASB, IASB, and other standard-setting and regulatory bodies (e.g., SEC) and develop the firm's accounting guidance on new and existing GAAP.About our hostHeather Horn is PwC’s National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With over 25 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting. Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [email protected].