# ASC 330-10-S99: Inventory — Overall — SEC 99 SEC Materials Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/330/10/#sec-99-sec-materials) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:51:21.227Z to 2026-09-09T23:51:21.227Z Record version: sha256:9c410604e70bd615546ca076dc5f830bf3e49a0c942d959abff6d42f63050255 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-S99: SEC 99 SEC Materials [Read section](https://asc.understandingaccounting.org/asc/330/10/#sec-99-sec-materials) SEC content: yes #### SEC Staff Guidance ##### [330-10-S99-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-S99-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:51:21.227Z to 2026-09-09T23:51:21.227Z Record version: sha256:69dbfb876f7bd5a8088b559b7bb01460260105826acb4e3613dc2884afd50ef6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.L, LIFO Inventory Practices. - Facts: On November 30, 1984, AcSEC and its Task Force on LIFO Inventory Problems (task force) issued a paper, "Identification and Discussion of Certain Financial Accounting and Reporting Issues Concerning LIFO Inventories." This paper identifies and discusses certain financial accounting and reporting issues related to the last-in, first-out (LIFO) inventory method for which authoritative accounting literature presently provides no definitive guidance. For some issues, the task force's advisory conclusions recommend changes in current practice to narrow the diversity which the task force believes exists. For other issues, the task force's advisory conclusions recommend that current practice should be continued for financial reporting purposes and that additional accounting guidance is unnecessary. Except as otherwise noted in the paper, AcSEC generally supports the task force's advisory conclusions. As stated in the issues paper, "Issues papers of the AICPA's accounting standards division are developed primarily to identify financial accounting and reporting issues the division believes need to be addressed or clarified by the Financial Accounting Standards Board." On February 6, 1985, the FASB decided not to add to its agenda a narrow project on the subject of LIFO inventory practices. - Question 1: What is the SEC staff's position on the issues paper? - Interpretive Response: In the absence of existing authoritative literature on LIFO accounting, the staff believes that registrants and their independent accountants should look to the paper for guidance in determining what constitutes acceptable LIFO accounting practice. FN11 In this connection, the staff considers the paper to be an accumulation of existing acceptable LIFO accounting practices which does not establish any new standards and does not diverge from GAAP. - FN11 In ASR 293 (July 2, 1981) see Financial Reporting Codification 205, the Commission expressed its concerns about the inappropriate use of Internal Revenue Service (IRS) LIFO practices for financial statement preparation. Because the IRS amended its regulations concerning the LIFO conformity rule on January 13, 1981, allowing companies to apply LIFO differently for financial reporting purposes than for tax purposes, the Commission strongly encouraged registrants and their independent accountants to examine their financial reporting LIFO practices. In that release, the Commission acknowledged the "task force which has been established by AcSEC to accumulate information about \[LIFO\] application problems" and noted that "This type of effort, in addition to self-examination \[of LIFO practices\] by individual registrants, is appropriate..." - The staff also believes that the advisory conclusions recommended in the issues paper are generally consistent with conclusions previously expressed by the Commission, such as: - 1\. Pooling-paragraph 4-6 of the paper discusses LIFO inventory pooling and concludes "establishing separate pools with the principal objective of facilitating inventory liquidations is unacceptable." In Accounting and Auditing Enforcement Release 35, August 13, 1984, the Commission stated that it believes that the Company improperly realigned its LIFO pools in such a way as to maximize the likelihood and magnitude of LIFO liquidations and thus, overstated net income. - 2\. New Items-paragraph 4-27 of the paper discusses determination of the cost of new items and concludes "if the double extension or an index technique is used, the objective of LIFO is achieved by reconstructing the base year cost of new items added to existing pools." In ASR 293, the Commission stated that when the effects of inflation on the cost of new products are measured by making a comparison with current cost as the base-year cost, rather than a reconstructed base-year cost, income is improperly increased. - Question 2: If a registrant utilizes a LIFO practice other than one recommended by an advisory conclusion in the issues paper, must the registrant change its practice to one specified in the paper? - Interpretive Response: Now that the issues paper is available, the staff believes that a registrant and its independent accountants should re-examine previously adopted LIFO practices and compare them to the recommendations in the paper. In the event that the registrant and its independent accountants conclude that the registrant's LIFO practices are preferable in the circumstances, they should be prepared to justify their position in the event that a question is raised by the staff. - Question 3: If a registrant elects to change its LIFO practices to be consistent with the guidance in the issues paper and discloses such changes in accordance with FASB ASC Topic 250, Accounting Changes and Error Corrections, will the registrant be requested by the staff to explain its past practices and its justification for those practices? - Interpretive Response: The staff does not expect to routinely raise questions about changes in LIFO practices which are made to make a company's accounting consistent with the recommendations in the issues paper. ##### [330-10-S99-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-S99-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:51:21.227Z to 2026-09-09T23:51:21.227Z Record version: sha256:fd60deef912410b10c73b0b66a99ea3ad157ece3349e28e3e4a5b484fcc64810 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 5.BB, Inventory Valuation Allowance. - Facts: FASB ASC paragraph [330-10-35-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-1) (Inventory Topic), specifies that: "\[a\] departure from the cost basis of pricing the inventory is required when the utility of the goods is no longer as great as its cost. Where there is evidence that the utility of goods, in their disposal in the ordinary course of business, will be less than cost, whether due to physical deterioration, obsolescence, changes in price levels, or other causes, the difference shall be recognized as a loss of the current period. This is generally accomplished by stating such goods at a lower level commonly designated as market." - FASB ASC paragraph [330-10-35-14](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-14) indicates that "\[i\]n the case of goods which have been written down below cost at the close of a fiscal year, such reduced amount is to be considered the cost for subsequent accounting purposes." - Lastly, the FASB ASC Master Glossary provides "inventory obsolescence" as one of the items subject to a change in accounting estimate. - Question: Does the write-down of inventory to the lower of cost or market, as required by FASB ASC Topic 330, create a new cost basis for the inventory or may a subsequent change in facts and circumstances allow for restoration of inventory value, not to exceed original historical cost? - Interpretive Response: Based on FASB ASC paragraph [330-10-35-14](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-14), the staff believes that a write-down of inventory to the lower of cost or market at the close of a fiscal period creates a new cost basis that subsequently cannot be marked up based on changes in underlying facts and circumstances. FN59 - FN59 See also disclosure requirement for inventory balances in Rule 5-02(6) of Regulation S-X. ##### [330-10-S99-3](https://asc.understandingaccounting.org/asc/330/10/#330-10-S99-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:51:21.227Z to 2026-09-09T23:51:21.227Z Record version: sha256:3b84308d6f41e9e381d79b257a652b9997729e710ed0961d4810032f2703476f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following is the text of SAB Topic 11.F, LIFO Liquidations. - Facts: Registrant on LIFO basis of accounting liquidates a substantial portion of its LIFO inventory and as a result includes a material amount of income in its income statement which would not have been recorded had the inventory liquidation not taken place. - Question: Is disclosure required of the amount of income realized as a result of the inventory liquidation? - Interpretive Response: Yes. Such disclosure would be required in order to make the financial statements not misleading. Disclosure may be made either in a footnote or parenthetically on the face of the income statement.