To mark this momentous year for UK GAAP, I'm embarking on a mission to work my way through FRS 102, reading a portion on each working day of 2015 and writing a short blog entry on my thoughts and musings (be they few or many).
Day 45 (7 April)
It's April, and sated with more Creme Eggs than a mortal should withstand, I return from my Easter break ready once more to plunge into the heady depths of FRS 102. And we've waved goodbye to financial instruments for more familiar territory: section 13 on inventories.
This section of FRS 102 is horrible. Because of the word 'inventory'. I've really given it an honest trial, forcing myself to use the Americanism for a matter of several weeks, and the bitter taste hasn't gone away. 'Stocks' always brought to mind a bizarre but pleasing mental image of someone fastened into a medieval wooden restrainer before being submerged into a vat of hot water laden with Oxo cubes. 'Inventory', by contrast, conjures up drab, grey shelves of nondescript boxes and a faint odour of Jeyes cleaning fluid. Which is probably more accurate, if a little depressing.
Anyway, the good news is that section 13 is both brief and pretty predictable. Compared to dear old SSAP 9, its focus is narrower (construction contracts are now dealt with by the Revenue section to which we will eventually come). The basic approach to measuring inventory in 13.4 remains the lower of cost and NRV, although the latter has been renamed 'estimated selling price less costs to complete and sell', so it's strictly the lower of cost and ESPLCTCAS from now on (I suggest pronouncing this 'ess-splicty-cass').
That's it for now - more detail on the cost calculation tomorrow...
P.S. If you missed the last instalment click here