Document ID: chunk:federal_register_of_legislation:F2022C00496:body:0:p4
Version: federal_register_of_legislation:F2022C00496
Segment Type: other
Provision Reference: 
Character Range: 8311–11269

net amount that an entity expects to realise from the sale of inventory in the ordinary course of business. Fair value reflects the price at which an orderly transaction to sell the same inventory in the principal (or most advantageous) market for that inventory would take place between market participants at the measurement date. The former is an entity-specific value; the latter is not. Net realisable value for inventories may not equal fair value less costs to sell.
8 Inventories encompass goods purchased and held for resale including, for example, merchandise purchased by a retailer and held for resale, or land and other property held for resale. Inventories also encompass finished goods produced, or work in progress being produced, by the entity and include materials and supplies awaiting use in the production process. Costs incurred to fulfil a contract with a customer that do not give rise to inventories (or assets within the scope of another Standard) are accounted for in accordance with AASB 15 Revenue from Contracts with Customers.

Measurement of inventories
9 Inventories shall be measured at the lower of cost and net realisable value.
Aus9.1 Notwithstanding paragraph 9, each not-for-profit entity shall measure inventories held for distribution at cost, adjusted when applicable for any loss of service potential.
Aus9.2 Not-for-profit entities would need to use judgment in determining the factors relevant to the circumstances in assessing whether there is a loss of service potential for inventories held for distribution.  For many inventories held for distribution, a loss of service potential would be identified and measured based on the existence of a current replacement cost that is lower than the original acquisition cost or other subsequent carrying amount.  For other inventories held for distribution, a loss of service potential might be identified and measured based on a loss of operating capacity due to obsolescence.  Different bases for determining whether there has been a loss of service potential and the measurement of that loss may apply to different inventories held for distribution within the same entity.

Cost of inventories
10 The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.
Aus10.1 Notwithstanding paragraph 10 and subject to paragraph Aus10.2, not-for-profit entities shall initially measure the cost of inventories at current replacement cost where the consideration for those inventories is significantly less than fair value principally to enable the entity to further its objectives. AASB 1058 Income of Not-for-Profit Entities addresses the recognition of related amounts.
Aus10.2 As a practical expedient, where a not-for-profit entity acquires inventory for consideration that is significantly less than fair value principally to enable the entity to further