# ASC 330-10: Inventory — Overall Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/330/10/) 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): 2026-09-09T23:50:30.404Z to 2026-09-09T23:51:21.227Z Record version: sha256:c39df8b09e7d239709f3e2e448c6996d08038409e2a8159a4dc8b5749424c313 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10: Inventory — Overall ### Machine-generated study aids ```json { "summary": "ASC 330-10 governs the accounting for inventory: inventory is initially measured at cost (all expenditures and charges, direct and indirect, incurred to bring an article to its existing condition and location), with fixed production overhead allocated based on normal capacity and unallocated overhead, abnormal freight, handling, and spoilage expensed as incurred. Cost may be assigned using FIFO, average cost, LIFO, standard cost, or the retail inventory method, chosen to most clearly reflect periodic income and applied consistently. Subsequent measurement is bifurcated: inventory measured under LIFO or the retail inventory method uses lower of cost or market, while all other inventory (FIFO, average cost) uses lower of cost and net realizable value.", "key_points": [ "Inventory's primary basis of accounting is cost — the sum of applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location (330-10-30-1).", "Fixed production overhead is allocated based on the normal capacity of production facilities; the per-unit allocation may not be increased because of abnormally low production or idle plant, and unallocated overheads are expensed in the period incurred (330-10-30-6 through 30-7).", "Abnormal freight, handling costs, spoilage, general and administrative expenses (except portions clearly related to production), and all selling expenses are period charges, not inventory costs (330-10-30-7 through 30-8).", "Cost flow assumptions (FIFO, average, LIFO), standard costs adjusted at reasonable intervals, and the retail inventory method are all acceptable; the method chosen should most clearly reflect periodic income and be applied consistently (330-10-30-9, 30-12, 30-15).", "Inventory measured using any method other than LIFO or the retail inventory method is measured at the lower of cost and net realizable value, with any excess of cost recognized as a loss in earnings in the period it occurs (330-10-35-1B).", "Inventory measured using LIFO or the retail inventory method is subject to the lower of cost or market rule, where market is generally current replacement cost but is capped at net realizable value and floored by NRV less a normal profit margin — no loss is recognized if cost will be recovered with an approximately normal profit (330-10-35-1C through 35-5).", "A write-down establishes a new cost basis that may not be reversed (330-10-35-14); net losses on firm, uncancelable, unhedged purchase commitments must be accrued and disclosed separately in the income statement (330-10-35-17, 330-10-50-5); inventory may be stated above cost only in exceptional cases such as precious metals with a government-controlled fixed market or certain interchangeable agricultural and mineral products (330-10-35-15 through 35-16)." ], "categories": [ "Inventory and PP&E", "Initial measurement", "Subsequent measurement", "Impairment" ], "audience_level": "introductory", "student_note": "The most tested trap is the post-ASU 2015-11 split: LIFO and retail-method inventories still use \"lower of cost or market\" (with the replacement-cost ceiling/floor analysis), while FIFO and average-cost inventories use the simpler \"lower of cost and net realizable value.\" Also remember that a write-down creates a new cost basis — under U.S. GAAP it is not reversed if value recovers (330-10-35-14).", "related_topics": [ "270-10", "340-40", "705-20", "845-10", "815-25", "250-10" ], "key_concepts": [ "inventory cost", "normal capacity", "fixed production overhead allocation", "lower of cost and net realizable value", "lower of cost or market", "cost flow assumptions (fifo, lifo, average)", "retail inventory method", "firm purchase commitment losses" ] } ``` Source downloaded (UTC): 2026-09-09T23:50:30.404Z to 2026-09-09T23:50:30.404Z Record version: sha256:c4a35cd99d4bf1b1c39309798c334171579228515b05af3f998e2317eae5b346 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/330/10/#00-status) SEC content: no ##### [330-10-00-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:30.404Z to 2026-09-09T23:50:30.404Z Record version: sha256:720c759f009e8a658b95e192e420925904d005a6a852b185ec600570ba50daf5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
CustomerAddedAccounting Standards Update No. 2014-0905/28/2014
Direct Effects of a Change in Accounting PrincipleAmendedAccounting Standards Update No. 2015-1107/22/2015
Market (2nd def.)AmendedAccounting Standards Update No. 2014-0603/14/2014
Net Realizable Value (1st def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Net Realizable Value (2nd def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Public Business EntityAmendedMaintenance Update 2017-06 (PDF)04/07/2017
Public Business EntityAmendedMaintenance Update 2016-11 (PDF)06/27/2016
Reseller (2nd def.)AddedAccounting Standards Update No. 2014-0905/28/2014
VendorAddedAccounting Standards Update No. 2014-0905/28/2014
330-10-30-8AmendedAccounting Standards Update No. 2014-0905/28/2014
330-10-30-19SupersededAccounting Standards Update No. 2014-0905/28/2014
330-10-30-20AddedAccounting Standards Update No. 2014-0905/28/2014
330-10-30-21AddedAccounting Standards Update No. 2014-0905/28/2014
330-10-35-1SupersededAccounting Standards Update No. 2015-1107/22/2015
330-10-35-1A through 35-1C
AddedAccounting Standards Update No. 2015-1107/22/2015
330-10-35-2AmendedAccounting Standards Update No. 2015-1107/22/2015
330-10-35-6SupersededAccounting Standards Update No. 2015-1107/22/2015
330-10-35-7AAddedAccounting Standards Update No. 2015-1107/22/2015
330-10-35-8 through 35-11
AmendedAccounting Standards Update No. 2015-1107/22/2015
330-10-35-21AmendedAccounting Standards Update No. 2014-0905/28/2014
330-10-35-22AmendedAccounting Standards Update No. 2014-0905/28/2014
330-10-45-2SupersededAccounting Standards Update No. 2014-0905/28/2014
330-10-50-1AmendedAccounting Standards Update No. 2012-0410/01/2012
330-10-50-2AmendedAccounting Standards Update No. 2015-1107/22/2015
330-10-50-5AmendedAccounting Standards Update No. 2024-0311/04/2024
330-10-55-2AmendedAccounting Standards Update No. 2015-1107/22/2015
330-10-55-5 through 55-7
SupersededAccounting Standards Update No. 2017-0703/10/2017
330-10-55-6AAddedAccounting Standards Update No. 2017-0703/10/2017
330-10-65-1AddedAccounting Standards Update No. 2015-1107/22/2015
Source downloaded (UTC): 2026-09-09T23:50:33.473Z to 2026-09-09T23:50:33.473Z Record version: sha256:4ea5a29600c4bf811550f5cae39d34a747789dc6f24ab94b3a316c985ce777ac Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/330/10/#05-overview-and-background) SEC content: no ##### [330-10-05-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:33.473Z to 2026-09-09T23:50:33.473Z Record version: sha256:2afb66158d4769376dc28675553524bc3284a289287ba0ed3e1db479bb98a919 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The [Inventory](https://asc.understandingaccounting.org/glossary/i/#inventory "The aggregate of those items of tangible personal property that have any of the following characteristics: Held for sale in the ordinary course of business In process of production for such sale To be currently consumed in the production of goods or services to be available for sale. The term inventory embraces goods awaiting sale (the merchandise of a trading concern and the finished goods of a manufacturer), goods in the course of production (work in process), and goods to be consumed directly or indirectly in production (raw materials and supplies). This definition of inventories excludes long-term assets subject to depreciation accounting, or goods which, when put into use, will be so classified. The fact that a depreciable asset is retired from regular use and held for sale does not indicate that the item should be classified as part of the inventory. Raw materials and supplies purchased for production may be used or consumed for the construction of long-term assets or other purposes not related to production, but the fact that inventory items representing a small portion of the total may not be absorbed ultimately in the production process does not require separate classification. By trade practice, operating materials and supplies of certain types of entities such as oil producers are usually treated as inventory.") Topic addresses the accounting principles and reporting practices applicable to inventory. ##### [330-10-05-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-05-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:33.473Z to 2026-09-09T23:50:33.473Z Record version: sha256:44e3889cde55ee061c5ba4d1cbccb1f6c90ecd6f0a102117a3d80b3e69260d17 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An inventory has financial significance because revenues may be obtained from its sale, or from the sale of the goods or services in the production of which it is used. Normally such revenues arise in a continuous repetitive process or cycle of operations in which goods are acquired, created, and sold, and further goods are acquired for additional sales. ##### [330-10-05-3](https://asc.understandingaccounting.org/asc/330/10/#330-10-05-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:33.473Z to 2026-09-09T23:50:33.473Z Record version: sha256:0a6aefeaec25660a3bda5e42ab9594053159c29f5692415817490f80327cf91c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Thus, the inventory at any given date is the balance of costs applicable to goods on hand remaining after the matching of absorbed costs with concurrent revenues. This balance is appropriately carried to future periods provided it does not exceed an amount properly chargeable against the revenues expected to be obtained from ultimate disposition of the goods carried forward. In practice, this balance is determined by the process of pricing the articles included in the inventory. Source downloaded (UTC): 2026-09-09T23:50:35.647Z to 2026-09-09T23:50:35.647Z Record version: sha256:bb5b9f36f4b4e3f319dd18ad7d92abd8b5b1a273864545d905e4dbbc4d79a2ab Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-10: 10 Objectives [Read section](https://asc.understandingaccounting.org/asc/330/10/#10-objectives) SEC content: no ##### [330-10-10-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-10-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:35.647Z to 2026-09-09T23:50:35.647Z Record version: sha256:c13291aa10001aac803051bd65fcb11830453c0cbe25d53e360018813b496c96 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A major objective of accounting for inventories is the proper determination of income through the process of matching appropriate costs against revenues. Source downloaded (UTC): 2026-09-09T23:50:38.796Z to 2026-09-09T23:50:38.796Z Record version: sha256:4badf5ea554d9de88b169f70e7a7f485a035061a5f4a1aa25aa48a3597134c57 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/330/10/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [330-10-15-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:38.796Z to 2026-09-09T23:50:38.796Z Record version: sha256:9c1178cfb0beefe98d3785c0d02a08407c75934b3a053819f5a2570f480fcb73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The Scope Section of the Overall Subtopic establishes the pervasive scope for the [Inventory](https://asc.understandingaccounting.org/glossary/i/#inventory "The aggregate of those items of tangible personal property that have any of the following characteristics: Held for sale in the ordinary course of business In process of production for such sale To be currently consumed in the production of goods or services to be available for sale. The term inventory embraces goods awaiting sale (the merchandise of a trading concern and the finished goods of a manufacturer), goods in the course of production (work in process), and goods to be consumed directly or indirectly in production (raw materials and supplies). This definition of inventories excludes long-term assets subject to depreciation accounting, or goods which, when put into use, will be so classified. The fact that a depreciable asset is retired from regular use and held for sale does not indicate that the item should be classified as part of the inventory. Raw materials and supplies purchased for production may be used or consumed for the construction of long-term assets or other purposes not related to production, but the fact that inventory items representing a small portion of the total may not be absorbed ultimately in the production process does not require separate classification. By trade practice, operating materials and supplies of certain types of entities such as oil producers are usually treated as inventory.") Topic. #### Entities ##### [330-10-15-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-15-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:38.796Z to 2026-09-09T23:50:38.796Z Record version: sha256:5d07dfb2c0f9635a18c8243c210ce2e68ce4418e50f6d902e015315d27bf5ca3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in the Inventory Topic applies to all entities, with the following qualifications. ##### [330-10-15-3](https://asc.understandingaccounting.org/asc/330/10/#330-10-15-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:38.796Z to 2026-09-09T23:50:38.796Z Record version: sha256:50da4421631e7e4ce16d4977f70b8b00ad332092f6890371ddea9203f3e68630 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The guidance in this Topic is not necessarily applicable to the following entities: 1. a Not-for-profit entities (NFPs) 2. b Regulated utilities. Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:6e675c2187973b40e1548f7da8063eeb75a3a9447ee857a6040300fe9ff3a813 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-30: 30 Initial Measurement [Read section](https://asc.understandingaccounting.org/asc/330/10/#30-initial-measurement) SEC content: no #### Cost Basis ##### [330-10-30-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:b8ef44a573cdf88501800f0eb7325413ad6993b8d054255a1f3e92370da1a6f9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The primary basis of accounting for inventories is cost, which has been defined generally as the price paid or consideration given to acquire an asset. As applied to inventories, cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. It is understood to mean acquisition and production cost, and its determination involves many considerations. ##### [330-10-30-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:1570c59aee9618e7bd4c1119ac659805cfb36e7b6d0b456c6e8b419e4e411b9e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although principles for the determination of [inventory](https://asc.understandingaccounting.org/glossary/i/#inventory "The aggregate of those items of tangible personal property that have any of the following characteristics: Held for sale in the ordinary course of business In process of production for such sale To be currently consumed in the production of goods or services to be available for sale. The term inventory embraces goods awaiting sale (the merchandise of a trading concern and the finished goods of a manufacturer), goods in the course of production (work in process), and goods to be consumed directly or indirectly in production (raw materials and supplies). This definition of inventories excludes long-term assets subject to depreciation accounting, or goods which, when put into use, will be so classified. The fact that a depreciable asset is retired from regular use and held for sale does not indicate that the item should be classified as part of the inventory. Raw materials and supplies purchased for production may be used or consumed for the construction of long-term assets or other purposes not related to production, but the fact that inventory items representing a small portion of the total may not be absorbed ultimately in the production process does not require separate classification. By trade practice, operating materials and supplies of certain types of entities such as oil producers are usually treated as inventory.") costs may be easily stated, their application, particularly to such inventory items as work in process and finished goods, is difficult because of the variety of considerations in the allocation of costs and charges. ##### [330-10-30-3](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:0eae4a01df9aa6e2bdb87cbe3f24da92ffdf1c38bb71d6346d03777c3ce1db14 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For example, variable production overheads are allocated to each unit of production on the basis of the actual use of the production facilities. However, the allocation of fixed production overheads to the costs of conversion is based on the normal capacity of the production facilities. Normal capacity refers to a range of production levels. Normal capacity is the production expected to be achieved over a number of periods or seasons under normal circumstances, taking into account the loss of capacity resulting from planned maintenance. Some variation in production levels from period to period is expected and establishes the range of normal capacity. ##### [330-10-30-4](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:da3d3f937dc6d9d605fed23a1f2704ca352f71f65470fce1e2a16ffcb8342e6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The range of normal capacity will vary based on business- and industry-specific factors. Judgment is required to determine when a production level is abnormally low (that is, outside the range of expected variation in production). ##### [330-10-30-5](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:1364e34ce38d77de392156ba2eb4ba6dad6348cd3f2c9156685068006bd06705 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Examples of factors that might be anticipated to cause an abnormally low production level include significantly reduced demand, labor and materials shortages, and unplanned facility or equipment downtime. ##### [330-10-30-6](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:d2137c242abf90807ebdbfcdaf56c71a72a0b90f8990720739dda99e4b5eba65 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The actual level of production may be used if it approximates normal capacity. In periods of abnormally high production, the amount of fixed overhead allocated to each unit of production shall be decreased so that inventories are not measured above cost. The amount of fixed overhead allocated to each unit of production shall not be increased as a consequence of abnormally low production or idle plant. ##### [330-10-30-7](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:a4f18e34fc5c681e4cd13fa07c04cac29db6f2bcfc3b3375630cc13457f2cc76 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Unallocated overheads shall be recognized as an expense in the period in which they are incurred. Other items such as abnormal freight, handling costs, and amounts of wasted materials (spoilage) require treatment as current period charges rather than as a portion of the inventory cost. ##### [330-10-30-8](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:9297f993ac4d4ebfd94b177fd884ec1ae563280ec4cae9437ea3aff83d604423 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Also, under most circumstances, general and administrative expenses shall be included as period charges, except for the portion of such expenses that may be clearly related to production and thus constitute a part of inventory costs (product charges). Selling expenses constitute no part of inventory costs. The exclusion of all overheads from inventory costs does not constitute an accepted accounting procedure. The exercise of judgment in an individual situation involves a consideration of the adequacy of the procedures of the cost accounting system in use, the soundness of the principles thereof, and their consistent application. General and administrative expenses ordinarily shall be charged to expense as incurred. #### Determination of Inventory Costs ##### [330-10-30-9](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:cd31f4f6495ca94c8d2ec57347581247b8c6ebe50725a70d6ba1b58d5a0afc1f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Cost for inventory purposes may be determined under any one of several assumptions as to the flow of cost factors, such as first-in first-out (FIFO), average, and last-in first-out (LIFO). The major objective in selecting a method should be to choose the one which, under the circumstances, most clearly reflects periodic income. ##### [330-10-30-10](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:282d214ae0cacba40bc4a12c0dc7f09f6bc73562e66a7d58b67cb217a01756db Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cost to be matched against revenue from a sale may not be the identified cost of the specific item which is sold, especially in cases in which similar goods are purchased at different times and at different prices. While in some lines of business specific lots are clearly identified from the time of purchase through the time of sale and are costed on this basis, ordinarily the identity of goods is lost between the time of acquisition and the time of sale. ##### [330-10-30-11](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:53d99b055580e4483362bfd9face4b197e7ed689ab1fa852fdacff6fd8663729 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Accordingly, if the materials purchased in various lots are identical and interchangeable, the use of identified cost of the various lots may not produce the most useful financial statements. This fact has resulted in the general acceptance of several assumptions with respect to the flow of cost factors such as FIFO, average, and LIFO to provide practical bases for the measurement of periodic income. ##### [330-10-30-12](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:b7d57cd3e88645916133665afec6a5568674f5493d1a73d9e9ef8d72f2f76179 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Standard costs are acceptable if adjusted at reasonable intervals to reflect current conditions so that at the balance-sheet date standard costs reasonably approximate costs computed under one of the recognized bases. In such cases descriptive language shall be used which will express this relationship, as, for instance, "approximate costs determined on the first-in first-out basis," or, if it is desired to mention standard costs, "at standard costs, approximating average costs." ##### [330-10-30-13](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:c14fc7947a3a07d9faecf07096e056d04a9e59a10948bd58516f5549f5466841 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In some situations a reversed mark-up procedure of inventory pricing, such as the retail inventory method, may be both practical and appropriate. The business operations in some cases may be such as to make it desirable to apply one of the acceptable methods of determining cost to one portion of the inventory or components thereof and another of the acceptable methods to other portions of the inventory. ##### [330-10-30-14](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:deecb0471c3d70b32eb62079d40959de5e3a75325d5dcad09ac20e7f95263f40 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Although selection of the method should be made on the basis of the individual circumstances, financial statements will be more useful if uniform methods of inventory pricing are adopted by all entities within a given industry. #### Consistency Required ##### [330-10-30-15](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:60a757251608c334d100598ab06f3f92331ff2962c37632c4885b01d76d41bdd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. While the basis of stating inventories does not affect the overall gain or loss on the ultimate disposition of inventory items, any inconsistency in the selection or employment of a basis may improperly affect the periodic amounts of income or loss. Because of the common use and importance of periodic statements, a procedure adopted for the treatment of inventory items shall be consistently applied in order that the results reported may be fairly allocated between years. #### Purchases and Sales of Inventory with the Same Counterparty ##### [330-10-30-16](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:c948b87110a8db34f83ed0c3174a72bf3451c9d5d28ebd47038d4fa7b698b20f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. For a discussion of the initial measurement of inventory purchased from an entity to which it also sells inventory in the same line of business, see paragraphs [845-10-55-10 through 55-26](https://asc.understandingaccounting.org/asc/845/10/#845-10-55-10) . #### Costs Resulting from Share-Based Payment Transactions ##### [330-10-30-17](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:ccc669768e997925856520c08601ea02e5484200d9025c68bc05036758b45018 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [718-10-25-2](https://asc.understandingaccounting.org/asc/718/10/#718-10-25-2) for a discussion of share-based payment capitalized as a part of inventory. #### Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed ##### [330-10-30-18](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:16ee91629192aadbcfbc73a669a8cd9b8eec333c1de374d10fa366d892dae976 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Sections 985-20-25 and 985-20-35 and paragraphs [985-20-55-2 through 55-3](https://asc.understandingaccounting.org/asc/985/20/#985-20-55-2) for a discussion of accounting for the costs of producing and acquiring computer software, including software that is marketed as part of a product or process. ##### [330-10-30-19](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:e41c3fcdc68aae41cd4dbd43775d76da5eb20fd8db73e77698718d79d2096aff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). #### Costs to Fulfill a Contract with a Customer ##### [330-10-30-20](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:228d2d5f6d6f4d131d193a0dacf2c5880be93b0a4f0570f2abde30d794b5ce6a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [340-40-25-5 through 25-8](https://asc.understandingaccounting.org/asc/340/40/#340-40-25-5) and paragraphs [340-40-35-1 through 35-6](https://asc.understandingaccounting.org/asc/340/40/#340-40-35-1) for the accounting for the costs to fulfill a contract with a customer if those costs are not in the scope of another Topic. #### Indirect Contract Costs by Government Contractors ##### [330-10-30-21](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:46.569Z to 2026-09-09T23:50:46.569Z Record version: sha256:adf8f1a6e704b42908f81f6a1a0da18bc417a66b29d43bb63278702197f0f40a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [912-20-25-1](https://asc.understandingaccounting.org/asc/912/20/#912-20-25-1) for the accounting for indirect contract costs by government contractors. Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:4c26d868a55d7fd57d54f4645713896dfef73e0ea2b3d94f1270f491b23c240a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/330/10/#35-subsequent-measurement) SEC content: no ##### [330-10-35-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:86a2f8c65617e0e4d01a8d004e2a7694bc80d86ab5207534e1085960d004a35f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-11](https://asc.understandingaccounting.org/updates/asu-2015-11/). ##### [330-10-35-1A](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-1A) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:75d470df61da62aa17311e1245a5bfc0ca9304c626d90c5685bad4f9642b605d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The subsequent measurement of [inventory](https://asc.understandingaccounting.org/glossary/i/#inventory "The aggregate of those items of tangible personal property that have any of the following characteristics: Held for sale in the ordinary course of business In process of production for such sale To be currently consumed in the production of goods or services to be available for sale. The term inventory embraces goods awaiting sale (the merchandise of a trading concern and the finished goods of a manufacturer), goods in the course of production (work in process), and goods to be consumed directly or indirectly in production (raw materials and supplies). This definition of inventories excludes long-term assets subject to depreciation accounting, or goods which, when put into use, will be so classified. The fact that a depreciable asset is retired from regular use and held for sale does not indicate that the item should be classified as part of the inventory. Raw materials and supplies purchased for production may be used or consumed for the construction of long-term assets or other purposes not related to production, but the fact that inventory items representing a small portion of the total may not be absorbed ultimately in the production process does not require separate classification. By trade practice, operating materials and supplies of certain types of entities such as oil producers are usually treated as inventory.") depends on the cost method and is different for the following: 1. a Inventory measured using any method other than last-in, first-out (LIFO) or the retail inventory method (see paragraph [330-10-35-1B](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-1B)) 2. b Inventory measured using LIFO or the retail inventory method (see paragraphs [330-10-35-1C through 35-7](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-1C) ). Paragraphs [330-10-35-7A through 35-11](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-7A) apply to all inventory. #### Inventory Measured Using Any Method Other Than LIFO or the Retail Inventory Method ##### [330-10-35-1B](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-1B) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:952b34218b4bf90197773a215f531c9e17f930453314b8f1d22c3cb799e502d1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Inventory measured using any method other than LIFO or the retail inventory method (for example, inventory measured using first-in, first-out (FIFO) or average cost) shall be measured at the lower of cost and [net realizable value](https://asc.understandingaccounting.org/glossary/n/#net-realizable-value "Estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation."). When evidence exists that the net realizable value of inventory is lower than its cost, the difference shall be recognized as a loss in earnings in the period in which it occurs. That loss may be required, for example, due to damage, physical deterioration, obsolescence, changes in price levels, or other causes. #### Inventory Measured Using LIFO or the Retail Inventory Method ##### [330-10-35-1C](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-1C) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:88fdf570e88661950c3a7d660481120130273844be41a4e5f0f10650cec55b87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A departure from the cost basis of pricing inventory measured using LIFO or the retail inventory method is required when the utility of the goods is no longer as great as their 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 damage, 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](https://asc.understandingaccounting.org/glossary/m/#market "As used in the phrase lower of cost or market, the term market means current replacement cost (by purchase or by reproduction, as the case may be) provided that it meets both of the following conditions: Market shall not exceed the net realizable valueMarket shall not be less than net realizable value reduced by an allowance for an approximately normal profit margin."). ##### [330-10-35-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:ee54cffbc27a37504870bc38d3cdd677076c8cd15aea8e9b0306f00da5ae46c1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The cost basis of recording inventory ordinarily achieves the objective of a proper matching of costs and revenues. However, under certain circumstances cost may not be the amount properly chargeable against the revenues of future periods. A departure from cost is required in these circumstances because cost is satisfactory only if the utility of the goods has not diminished since their acquisition; a loss of utility shall be reflected as a charge against the revenues of the period in which it occurs. Thus, in accounting for inventories, a loss shall be recognized whenever the utility of goods is impaired by damage, deterioration, obsolescence, changes in price levels, or other causes. The measurement of such losses for inventory measured using LIFO or the retail inventory method shall be accomplished by applying the rule of pricing inventories at the lower of cost or market. This provides a practical means of measuring utility and thereby determining the amount of the loss to be recognized and accounted for in the current period. ##### [330-10-35-3](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:6b0b1a1eb7dfdb650db885573922ec34290ff594c50fff3ea850c128c0a01b3c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The rule of lower of cost or market is intended to provide a means of measuring the residual usefulness of an inventory expenditure. The term _market_ is therefore to be interpreted as indicating utility on the inventory date and may be thought of in terms of the equivalent expenditure which would have to be made in the ordinary course at that date to procure corresponding utility. ##### [330-10-35-4](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:caeeb4a461f5f55c625a0ab703e8577ae3fa7518643c7d10a83bd5b9e6e32d26 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a general guide, utility is indicated primarily by the current cost of replacement of the goods as they would be obtained by purchase or reproduction. In applying the rule, however, judgment must always be exercised and no loss shall be recognized unless the evidence indicates clearly that a loss has been sustained. There are therefore exceptions to such a standard. Replacement or reproduction prices would not be appropriate as a measure of utility when the estimated sales value, reduced by the costs of completion and disposal, is lower, in which case the realizable value so determined more appropriately measures utility. ##### [330-10-35-5](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:7c4a648a2eb63501f6cf8a90fc45bc986d2f044bbc745ab84748cd0e5eccd0b9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Furthermore, when the evidence indicates that cost will be recovered with an approximately normal profit upon sale in the ordinary course of business, no loss shall be recognized even though replacement or reproduction costs are lower. This might be true, for example, in the case of production under firm sales contracts at fixed prices, or when a reasonable volume of future orders is assured at stable selling prices. ##### [330-10-35-6](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:6e2bac1b99d4be1b86e7fa6913b3783adc539b2a1ab4d1f1628ce5a723730383 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2015-11](https://asc.understandingaccounting.org/updates/asu-2015-11/). ##### [330-10-35-7](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:98dcabdacc5760e506266bf3812d6fc12c88244b74cd0f44e1db2e56f7b8eff6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Because of the many variations of circumstances encountered in inventory pricing, the definition of [market](https://asc.understandingaccounting.org/glossary/m/#market "As used in the phrase lower of cost or market, the term market means current replacement cost (by purchase or by reproduction, as the case may be) provided that it meets both of the following conditions: Market shall not exceed the net realizable valueMarket shall not be less than net realizable value reduced by an allowance for an approximately normal profit margin.") is intended as a guide rather than a literal rule. It shall be applied realistically in light of the objectives expressed in this Subtopic and with due regard to the form, content, and composition of the inventory. For example, the retail inventory method, if adequate markdowns are currently taken, accomplishes the objectives described herein. It is also recognized that, if a business is expected to lose money for a sustained period, the inventory shall not be written down to offset a loss inherent in the subsequent operations. #### Subsequent Measurement Guidance Applicable to All Inventory ##### [330-10-35-7A](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-7A) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:d25d2d349bc8540d86372443060a4ffaa3d427a4cd193bcb0a7cfcd72a47735b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If inventory has been the hedged item in a fair value hedge, the inventory's cost basis for purposes of subsequent measurement shall reflect the effect of the adjustments of its carrying amount made pursuant to paragraph [815-25-35-1(b)](https://asc.understandingaccounting.org/asc/815/25/#815-25-35-1). ##### [330-10-35-8](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:e78fa7cfb2bef2220b2d49eca539e1276010f137c6342efeeec10c7c0b0a25d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Depending on the character and composition of the inventory, the guidance in paragraphs [330-10-35-1A through 35-7](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-1A) that is applicable to the inventory being measured may properly be applied either directly to each item or to the total of the inventory (or, in some cases, to the total of the components of each major category). The method shall be that which most clearly reflects periodic income. ##### [330-10-35-9](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:a95485e85f71a5e191f63ecca007c59ccb2ad2345c391c4b12b83f6037ef0299 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The purpose of reducing the carrying amount of inventory is to reflect fairly the income of the period. The most common practice is to apply the applicable subsequent measurement guidance separately to each item of the inventory. However, if there is only one end-product category, the application of the applicable subsequent measurement guidance to inventory in its entirety may have the greatest significance for accounting purposes. Accordingly, the remeasurement of individual items may not always lead to the most useful result if the market value (for inventory measured using LIFO or the retail inventory method) or net realizable value (for all other inventory) of the total inventory is not below its cost. This might be the case, for example, if selling prices are not affected by temporary or small fluctuations in current costs of purchase or manufacture. ##### [330-10-35-10](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:d51df2533df3acf842d590bb7d1107178038e50d7dc9b15ea59e8852ea31899b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Similarly, where more than one major product or operational category exists, the application of the applicable subsequent measurement guidance to the total of the items included in such major categories may result in the most useful determination of income. When no loss of income is expected to take place as a result of a reduction of cost prices of certain goods because others forming components of the same general categories of finished products have a market value (for inventory measured using LIFO or the retail inventory method) or net realizable value (for all other inventory) equally in excess of cost, such components need not be adjusted to the extent that they are in balanced quantities. Thus, in such cases, the guidance on subsequent measurement may be applied directly to the totals of the entire inventory, rather than to the individual inventory items, if they enter into the same category of finished product and if they are in balanced quantities, provided the procedure is applied consistently from year to year. ##### [330-10-35-11](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:792e2935a17d3832968fb4b1ee3cae8f8e66744723b3b396f11d8a9de45dd5ea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. To the extent, however, that the stocks of particular materials or components are excessive in relation to others, the more widely recognized procedure of applying the guidance on subsequent measurement to the individual items constituting the excess shall be followed. This would also apply in cases in which the items enter into the production of unrelated products or products having a material variation in the rate of turnover. Unless an effective method of classifying categories is practicable, the rule shall be applied to each item in the inventory. ##### [330-10-35-12](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:1e5fc7e91f88b782eace5bec25a15962c4b52dafd1b8ea887bd29ed3bae813b2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [330-10-30-9 through 30-14](https://asc.understandingaccounting.org/asc/330/10/#330-10-30-9) for guidance on inventory pricing methods. #### Loss Due to Sales Incentive ##### [330-10-35-13](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:c8ed79c1a477e0ebf88e733fd024c159b8511bc447b0c49b61c43ff48813ea67 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The offer of a sales incentive that will result in a loss on the sale of a product may indicate an impairment of existing inventory under this Subtopic. #### New Cost Basis ##### [330-10-35-14](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-14) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:d4f387e201c9b35da1f59b26aebb6e0e1fc9a00d0cc3c6d9fc031bb7acd078fa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In 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. Paragraph [270-10-45-6](https://asc.understandingaccounting.org/asc/270/10/#270-10-45-6) provides guidance for preparing interim financial statements. #### Stating Inventories Above Cost ##### [330-10-35-15](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-15) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:0d92c0eaaf8af3790036b120ac725bde3d238b4cc8d9624a5dc6480982d17827 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Only in exceptional cases may inventories properly be stated above cost. For example, precious metals having a fixed monetary value with no substantial cost of marketing may be stated at such monetary value; any other exceptions must be justifiable by inability to determine appropriate approximate costs, immediate marketability at quoted market price, and the characteristic of unit interchangeability. ##### [330-10-35-16](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-16) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:5ed769d55a9079d9b774e326f294152b2c29bcc4cc90406a521d9fcb310b15ec Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. It is generally recognized that income accrues only at the time of sale, and that gains may not be anticipated by reflecting assets at their current sales prices. However, exceptions for reflecting assets at selling prices are permissible for both of the following: 1. a Inventories of gold and silver, when there is an effective government-controlled market at a fixed monetary value 2. b Inventories representing agricultural, mineral, and other products, with all of the following criteria: 1. 1 Units of which are interchangeable 2. 2 Units of which have an immediate marketability at quoted prices 3. 3 Units for which appropriate costs may be difficult to obtain. Where such inventories are stated at sales prices, they shall be reduced by expenditures to be incurred in disposal. #### Purchase Commitments ##### [330-10-35-17](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-17) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:553ba7bd6679e11212205d9363c13a6e6f1a4eb8680b37eba81dc3bbe0d13c70 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A net loss on firm purchase commitments for goods for inventory, measured in the same way as are inventory losses, shall be recognized in the accounts. The recognition in a current period of losses arising from the decline in the utility of cost expenditures is equally applicable to similar losses which are expected to arise from firm, uncancelable, and unhedged commitments for the future purchase of inventory items. ##### [330-10-35-18](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-18) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:40ef6eb7ea60cd47d6fa6ada67c0f8a4f6f563773dcf76a50dbb079be1883773 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The utility of such commitments is not impaired, and hence there is no loss, when the amounts to be realized from the disposition of the future inventory items are adequately protected by firm sales contracts or when there are other circumstances that reasonably assure continuing sales without price decline. #### Accounting Changes ##### [330-10-35-19](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-19) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:76384cf8ecd0f7710d4a182d6b1c634639fbce04b89117dcfdb9f53aca3900d9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph [250-10-55-1](https://asc.understandingaccounting.org/asc/250/10/#250-10-55-1) explains that a change in composition of the elements of cost included in inventory is an accounting change and provides related guidance. ##### [330-10-35-20](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-20) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:26b0329b9de70ffe98f1da5400140d83e6b0ff42d85e9c1bd0375f06812d808e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The definition of [direct effects of a change in accounting principle](https://asc.understandingaccounting.org/glossary/d/#direct-effects-of-a-change-in-accounting-principle "Those recognized changes in assets or liabilities necessary to effect a change in accounting principle. An example of a direct effect is an adjustment to an inventory balance to effect a change in inventory valuation method. Related changes, such as an effect on deferred income tax assets or liabilities or an impairment adjustment resulting from applying the subsequent measurement guidance in Subtopic 330-10to the adjusted inventory balance, also are examples of direct effects of a change in accounting principle.") includes a change in inventory valuation methods as an accounting change. #### Accounting for Consideration Payable to a Customer ##### [330-10-35-21](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-21) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:e38138e3ae4c907e699f5854b8d443eecb3b9e9e3fd895ddb7c038e22655d0b1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [606-10-32-25 through 32-27](https://asc.understandingaccounting.org/asc/606/10/#606-10-32-25) for a discussion of consideration given by an entity to a [customer](https://asc.understandingaccounting.org/glossary/c/#customer "A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration."). #### Accounting for Consideration Received from a Vendor ##### [330-10-35-22](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-22) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:0117f03b6b90e25e29c503b5bfde53b4c4be12e2b8ceb8149cd404b8af8c08a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Subtopic 705-20 on costs of sales and services for a discussion of accounting by an entity, that is, a customer (including a [reseller](https://asc.understandingaccounting.org/glossary/r/#reseller "Any entity that purchases another vendor's products for resale, regardless of whether that entity is a distributor or wholesaler, a retailer, or other type of reseller.")) for, for consideration received from a [vendor](https://asc.understandingaccounting.org/glossary/v/#vendor "A service provider or product seller, such as a manufacturer, distributor, or reseller."). #### Interim Financial Reporting ##### [330-10-35-23](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-23) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:48.239Z to 2026-09-09T23:50:48.239Z Record version: sha256:1ff6547f4ab3c509b0e4693a6c18ad16b7cf06446bd9b301a0e90f52b0b6852f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [270-10-45-6](https://asc.understandingaccounting.org/asc/270/10/#270-10-45-6) for a discussion of practices used in determining costs of inventory on an interim basis. Source downloaded (UTC): 2026-09-09T23:50:49.927Z to 2026-09-09T23:50:49.927Z Record version: sha256:8056a76406a5a1fb486746100e4384fa7b9664d674b3cc1ddb89b3f716bebe03 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/330/10/#45-other-presentation-matters) SEC content: no #### Change in Composition Is Accounting Change ##### [330-10-45-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:49.927Z to 2026-09-09T23:50:49.927Z Record version: sha256:3836353150c11c4ff50b439dc52767e657612aa25262cb16ca0d794a87aae36f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [330-10-35-19](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-19) for guidance on dealing with the effects of an accounting change resulting from a change in elements of cost included in [inventory](https://asc.understandingaccounting.org/glossary/i/#inventory "The aggregate of those items of tangible personal property that have any of the following characteristics: Held for sale in the ordinary course of business In process of production for such sale To be currently consumed in the production of goods or services to be available for sale. The term inventory embraces goods awaiting sale (the merchandise of a trading concern and the finished goods of a manufacturer), goods in the course of production (work in process), and goods to be consumed directly or indirectly in production (raw materials and supplies). This definition of inventories excludes long-term assets subject to depreciation accounting, or goods which, when put into use, will be so classified. The fact that a depreciable asset is retired from regular use and held for sale does not indicate that the item should be classified as part of the inventory. Raw materials and supplies purchased for production may be used or consumed for the construction of long-term assets or other purposes not related to production, but the fact that inventory items representing a small portion of the total may not be absorbed ultimately in the production process does not require separate classification. By trade practice, operating materials and supplies of certain types of entities such as oil producers are usually treated as inventory."). ##### [330-10-45-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-45-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:49.927Z to 2026-09-09T23:50:49.927Z Record version: sha256:1a5b276dc47473f8a5eab55570583ef5f787b273918e92aefe7887985d880bb7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2014-09](https://asc.understandingaccounting.org/updates/asu-2014-09/). Source downloaded (UTC): 2026-09-09T23:50:51.981Z to 2026-09-09T23:50:51.981Z Record version: sha256:38f09360d2a43bc75833eec266a734ac69ce27b2cc0957973d2c28f4041ea049 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/330/10/#50-disclosure) SEC content: no #### Basis for Stating Inventories ##### [330-10-50-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-50-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:51.981Z to 2026-09-09T23:50:51.981Z Record version: sha256:b05c136435bd0cff6d6e83d4d13fa7e6ed485ef8394d0d70234103e4f537a930 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The basis of stating inventories shall be consistently applied and shall be disclosed in the financial statements; whenever a significant change is made therein, there shall be disclosure of the nature of the change and, if material, the effect on income. A change of such basis may have an important effect upon the interpretation of the financial statements both before and after that change, and hence, in the event of a change, a full disclosure of its nature and of its effect, if material, upon income shall be made. See paragraph [210-10-50-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-50-1). #### Losses from the Subsequent Measurement of Inventory ##### [330-10-50-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-50-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:51.981Z to 2026-09-09T23:50:51.981Z Record version: sha256:f13078a9cc9aca82e6fae2d57a8abb87fa9f0a8c54560875d5395b92d45b0b8d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Substantial and unusual losses that result from the subsequent measurement of [inventory](https://asc.understandingaccounting.org/glossary/i/#inventory "The aggregate of those items of tangible personal property that have any of the following characteristics: Held for sale in the ordinary course of business In process of production for such sale To be currently consumed in the production of goods or services to be available for sale. The term inventory embraces goods awaiting sale (the merchandise of a trading concern and the finished goods of a manufacturer), goods in the course of production (work in process), and goods to be consumed directly or indirectly in production (raw materials and supplies). This definition of inventories excludes long-term assets subject to depreciation accounting, or goods which, when put into use, will be so classified. The fact that a depreciable asset is retired from regular use and held for sale does not indicate that the item should be classified as part of the inventory. Raw materials and supplies purchased for production may be used or consumed for the construction of long-term assets or other purposes not related to production, but the fact that inventory items representing a small portion of the total may not be absorbed ultimately in the production process does not require separate classification. By trade practice, operating materials and supplies of certain types of entities such as oil producers are usually treated as inventory.") (see paragraphs [330-10-35-1A through 35-11](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-1A) ) should be disclosed in the financial statements. #### Goods Stated Above Cost ##### [330-10-50-3](https://asc.understandingaccounting.org/asc/330/10/#330-10-50-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:51.981Z to 2026-09-09T23:50:51.981Z Record version: sha256:c328f9d9919a270f9854c2b09d7a68a6e8b2ceb4fee275e3a0cf8c63aad80a5e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Where goods are stated above cost this fact shall be fully disclosed. #### Stating Inventories at Sales Prices ##### [330-10-50-4](https://asc.understandingaccounting.org/asc/330/10/#330-10-50-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:51.981Z to 2026-09-09T23:50:51.981Z Record version: sha256:4b96e452254c6fe41a6c1848347eeca6cb8986e011661da61b97542610a6d86d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Where such inventories are stated at sales prices, the use of such basis shall be fully disclosed in the financial statements. #### Losses on Firm Purchase Commitments ##### [330-10-50-5](https://asc.understandingaccounting.org/asc/330/10/#330-10-50-5) Pending content: yes Source downloaded (UTC): 2026-09-09T23:50:51.981Z to 2026-09-09T23:50:51.981Z Record version: sha256:e16fd56d06401de57917d210c435da9cfec79c8ca5760509225f20df626ef912 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amounts of net losses on firm purchase commitments accrued under paragraph [330-10-35-17](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-17) shall be disclosed separately in the income statement. Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance: [220-40-65-1](https://asc.understandingaccounting.org/asc/220/40/#220-40-65-1)The amounts of net losses on firm purchase commitments accrued under paragraph [330-10-35-17](https://asc.understandingaccounting.org/asc/330/10/#330-10-35-17) shall be disclosed separately in the income statement. See paragraphs [220-40-50-21 through 50-25](https://asc.understandingaccounting.org/asc/220/40/#220-40-50-21) for additional disclosure requirements. #### Disclosure of Significant Estimates ##### [330-10-50-6](https://asc.understandingaccounting.org/asc/330/10/#330-10-50-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:51.981Z to 2026-09-09T23:50:51.981Z Record version: sha256:5a1e3f47e54c46fdd4ffb498926935dcda6e8986a4ca0306c801189c2f2a4fe3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See Example 1 (paragraph [330-10-55-8](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-8)) for an illustration of the disclosure of significant estimates applicable to inventories as required by Section 275-10-50. Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:db93578e3e072edec46122e2781f91ffdf34290a562c3184a5e9fadbdf75689a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/330/10/#55-implementation-guidance-and-illustrations) SEC content: no ##### [330-10-55-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:613957398de308d5d689249e013fd482b5e6696b6d05431dc53467b3ce45ee36 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Section, which is an integral part of the requirements of this Topic, provides general guidance to be used in accounting for [inventory](https://asc.understandingaccounting.org/glossary/i/#inventory "The aggregate of those items of tangible personal property that have any of the following characteristics: Held for sale in the ordinary course of business In process of production for such sale To be currently consumed in the production of goods or services to be available for sale. The term inventory embraces goods awaiting sale (the merchandise of a trading concern and the finished goods of a manufacturer), goods in the course of production (work in process), and goods to be consumed directly or indirectly in production (raw materials and supplies). This definition of inventories excludes long-term assets subject to depreciation accounting, or goods which, when put into use, will be so classified. The fact that a depreciable asset is retired from regular use and held for sale does not indicate that the item should be classified as part of the inventory. Raw materials and supplies purchased for production may be used or consumed for the construction of long-term assets or other purposes not related to production, but the fact that inventory items representing a small portion of the total may not be absorbed ultimately in the production process does not require separate classification. By trade practice, operating materials and supplies of certain types of entities such as oil producers are usually treated as inventory."). Certain assumptions have been made to simplify the computations and focus on the issue at hand in each illustration. #### Implementation Guidance ##### [330-10-55-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:0b4ad80ad03189855caac18e69687d2a62f14e846e9e60e28221036ea151b0ff Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If near-term price recovery is uncertain, a decline in the [market](https://asc.understandingaccounting.org/glossary/m/#market "As used in the phrase lower of cost or market, the term market means current replacement cost (by purchase or by reproduction, as the case may be) provided that it meets both of the following conditions: Market shall not exceed the net realizable valueMarket shall not be less than net realizable value reduced by an allowance for an approximately normal profit margin.") value (for inventory measured using LIFO or the retail inventory method) or [net realizable value](https://asc.understandingaccounting.org/glossary/n/#net-realizable-value "Estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.") (for all other inventory) of inventory below cost during an interim period shall be accounted for consistent with annual periods, except as described in paragraph [270-10-45-6](https://asc.understandingaccounting.org/asc/270/10/#270-10-45-6). 1. a [Subparagraph superseded by Accounting Standards Update No. 2015-11](https://asc.understandingaccounting.org/updates/asu-2015-11/). 2. b [Subparagraph superseded by Accounting Standards Update No. 2015-11](https://asc.understandingaccounting.org/updates/asu-2015-11/). ##### [330-10-55-3](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:bad09ce8042007a4934688238168f8176243309efda806532c5405e82c307c8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following provides guidance as to whether the types of costs that are required to be allocated to inventories for tax purposes under the Uniform Capitalization Rules for Inventory under the Tax Reform Act of 1986 would be capitalizable under generally accepted accounting principles (GAAP) and, if so, whether the costing method required for tax purposes is a preferable method for purposes of justifying a change in accounting principle. ##### [330-10-55-4](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:7bee60da281d43eb68966635314e6d3c78f9db52126cfaccd41c0c825d3637fc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The fact that a cost is capitalizable for tax purposes does not, in itself, indicate that it is preferable, or even appropriate, to capitalize that cost for financial reporting purposes. Certain of the additional costs that are required to be capitalized for tax purposes may also be capitalizable for financial reporting purposes, depending on factors such as the nature of the entity's operation and industry practice. That determination, however, can only be made after an analysis of the individual facts and circumstances. ##### [330-10-55-5](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-5) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:ed85d5cdd0989705f439341ccacc0edafa132c163b4c0739281daa61b77258aa Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). ##### [330-10-55-6](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-6) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:e9d2085729f55a63d77680152e1638931d776687347753cc2b983dcfd106f30e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). ##### [330-10-55-6A](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-6A) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:e32cb0393869c016e8eea6676dc7eba47329ea9c8f1cd678ae427c23fcf9fb7a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The service cost component of net periodic pension cost and net periodic postretirement benefit cost is the only component directly arising from employees' services provided in the current period. Therefore, when it is appropriate to capitalize employee compensation in connection with the construction or production of an asset, the service cost component applicable to the pertinent employees for the period is the relevant amount to be considered for capitalization. ##### [330-10-55-7](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-7) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:a2e73a31adde2651d6742b780e10812f8c1ac412cdbc9067a70d78139901d4cd Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Paragraph superseded by Accounting Standards Update No. 2017-07](https://asc.understandingaccounting.org/updates/asu-2017-07/). #### Illustrations ##### [330-10-55-8](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-8) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:68f2cce41209beec586bb21344aeef28bddefbdafec3857027bf888f3f751713 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the guidance in paragraph [330-10-50-6](https://asc.understandingaccounting.org/asc/330/10/#330-10-50-6) regarding the disclosure of significant estimates related to inventory. Entity A manufactures high technology stereo equipment. In June 19X7, one of Entity A's competitors introduced a new model stereo system with the same features as Entity A's Model A. The competitor's version sells for significantly less than Entity A's suggested retail price for Model A. The introduction of this product resulted in a sharp decrease in the sales volume of Model A. As of December 31, 19X7, Entity A has accumulated significant inventory quantities beyond its normal short-term needs of its Model A system. Inventory for Model A ($6 million) represents approximately 20 percent of Entity A's inventory at that date. The remaining 80 percent of Entity A's inventory consists of products experiencing only normal competitive pressures. Entity A has established provisions for obsolescence for this latter group of products in the normal course of business. ##### [330-10-55-9](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-9) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:1349289d71460d11ffd57b2513cf2643648f2e880c84196458a13af606e16578 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Management has developed a program to provide substantial dealer incentives on purchases of the Model A, which it expects will result in the sale of this inventory in the near term. Because of the existing high profit margin on its stereo systems, Entity A would continue to earn a marginal profit on sales of the Model A under the new program. It is also reasonably possible, however, that the program will not be wholly successful, and, accordingly, a material loss could ultimately result on the disposal of the inventory. ##### [330-10-55-10](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-10) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:4744e27b858ca10180671b84d4517e02fe037ab8488c373e1247aafb8eb6e5b7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The entity would disclose the following. - As of December 31, 19X7, some portion of $6 million of inventory of one of the entity's products is in excess of Entity A's current requirements based on the recent level of sales. Management has developed a program to reduce this inventory to desired levels over the near term and believes no loss will be incurred on its disposition. No estimate can be made of a range of amounts of loss that are reasonably possible should the program not be successful. ##### [330-10-55-11](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-11) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:22839f76360ae094774a7ec3771f698edbc30b539ed4b92bf20f5e715298380b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This situation meets the criteria for disclosure under paragraph [275-10-50-8](https://asc.understandingaccounting.org/asc/275/10/#275-10-50-8) because circumstances that existed at the date of the financial statements, including the decreasing sales volume and excessive quantities of inventory of Model A, make it at least reasonably possible that management's plan to liquidate its excess inventory without a loss will be less than fully successful and that such an outcome would have a near-term material effect on the entity's financial statements. ##### [330-10-55-12](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-12) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:df828d24e1dfd6c97df2fc1ee90f45ae7bb316d80f1fe5726c4591b19fb351a7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In this Example, Entity A discloses the existence of potentially excess quantities of inventory at the date of the financial statements and indicates that the uncertainty is expected to be resolved in the near term. The disclosure is intended to provide users with insight into management's assessment of recoverability of the cost of inventories existing at the date of the financial statements. Although disclosure of the $6 million carrying amount of the inventory of Model A is not required because, based on the facts presented, $6 million does not constitute a reasonable estimate of loss on the disposal of the inventory or the maximum amount in an estimated range of loss, disclosure of this amount is not misleading and may provide useful information. ##### [330-10-55-13](https://asc.understandingaccounting.org/asc/330/10/#330-10-55-13) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:55.858Z to 2026-09-09T23:50:55.858Z Record version: sha256:f7cead5a6eb8e782ba4e44761e6629dcc813c5b0589a7f067261e621ba1523b4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Discussion of Entity A's provision for obsolescence for the remaining 80 percent of its inventory is not required because it is not considered reasonably possible that additional material losses on this inventory will occur. Source downloaded (UTC): 2026-09-09T23:50:59.127Z to 2026-09-09T23:50:59.127Z Record version: sha256:a2623fc27dde404338cabc7e2585a66380d98bb829fb43985402cbb86310de51 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-65: 65 Transition and Open Effective Date Information [Read section](https://asc.understandingaccounting.org/asc/330/10/#65-transition-and-open-effective-date-information) SEC content: no ##### [330-10-65-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-65-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:50:59.127Z to 2026-09-09T23:50:59.127Z Record version: sha256:993126433434d44a2c759c644e801523e1ddbd25a16950fa48aea768064a785f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Paragraph superseded on 06/20/2018 after the end of the transition period stated in Accounting Standards Update No. 2015-11, _Inventory (Topic 330): Simplifying the Measurement of Inventory_. Source downloaded (UTC): 2026-09-09T23:51:04.651Z to 2026-09-09T23:51:04.651Z Record version: sha256:bdc3f80e6f4b7db1cc309ad377aa0529473e0b9ab436af720ecba6a211ebc37a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-S00: SEC 00 Status [Read section](https://asc.understandingaccounting.org/asc/330/10/#sec-00-status) SEC content: yes ##### [330-10-S00-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-S00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:51:04.651Z to 2026-09-09T23:51:04.651Z Record version: sha256:bfaeb259264776c438a5fdfaef7f300ed9c1619b5b0c2035dcca8dcd8c13d6c5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
330-10-S35-2AmendedAccounting Standards Update No. 2009-0709/15/2009
330-10-S99-1AmendedAccounting Standards Update No. 2012-0308/27/2012
330-10-S99-2AmendedAccounting Standards Update No. 2012-0308/27/2012
Source downloaded (UTC): 2026-09-09T23:51:08.071Z to 2026-09-09T23:51:08.071Z Record version: sha256:6ed60e9315c0263b218569b15f07d57a2810e297eff52d98a8afc33600b913b6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-S35: SEC 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/330/10/#sec-35-subsequent-measurement) SEC content: yes #### Restoration of Previously Written-Down Inventory Value ##### [330-10-S35-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-S35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:51:08.071Z to 2026-09-09T23:51:08.071Z Record version: sha256:611987f380ac2ab5c06229733e6593d46c9ebd934bdfe70f4bbf547afdadacc0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [330-10-S99-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-S99-2), SAB Topic 5.BB, for SEC Staff views on restoration of inventory value following a previous write-down to lower of cost or market. #### Classification of Inventory Markdowns and Other Costs Associated with a Restructuring ##### [330-10-S35-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-S35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:51:08.071Z to 2026-09-09T23:51:08.071Z Record version: sha256:5a504aa73dd92d8e2aa2d6cb3ea881bbae50735031ff55f1410068312b8c29ba Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [420-10-S99-3](https://asc.understandingaccounting.org/asc/420/10/#420-10-S99-3), SEC Observer Comment: Classification of Inventory Markdowns and Other Costs Associated with Restructuring, for SEC Staff views on income statement classification of inventory markdowns associated with a restructuring. Source downloaded (UTC): 2026-09-09T23:51:10.448Z to 2026-09-09T23:51:10.448Z Record version: sha256:02f70d5a541ca0ffbd72a4c433ccb0e7513724d6a2d4df0baa585f4124e2c687 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-S45: SEC 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/330/10/#sec-45-other-presentation-matters) SEC content: yes #### Separate Presentation of Classes of Inventory ##### [330-10-S45-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-S45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:51:10.448Z to 2026-09-09T23:51:10.448Z Record version: sha256:12ecefb984489a86166b10cd4037f1aa82832e77c0a8bae825043cbc045e88ef Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1), Regulation S-X Rule 5-02.6, for requirements for inventory presentation on the balance sheet. Source downloaded (UTC): 2026-09-09T23:51:13.083Z to 2026-09-09T23:51:13.083Z Record version: sha256:2d068aaa667f784d7939a6059e11aae6098e8c97cd6db34df0c1ebe6d77dbd24 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-S50: SEC 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/330/10/#sec-50-disclosure) SEC content: yes #### Inventory Disclosure Requirements ##### [330-10-S50-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-S50-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:51:13.083Z to 2026-09-09T23:51:13.083Z Record version: sha256:dda3f747ef303129b99a3bf100070dcd6f13b4e8430de10bcccc748f657aca16 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [210-10-S99-1](https://asc.understandingaccounting.org/asc/210/10/#210-10-S99-1), Regulation S-X Rules 5-02.6(b) through (d), for inventory disclosure requirements. #### LIFO Liquidations ##### [330-10-S50-2](https://asc.understandingaccounting.org/asc/330/10/#330-10-S50-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:51:13.083Z to 2026-09-09T23:51:13.083Z Record version: sha256:543b733917c28ade021c8808c85e770937654749cc68a83d61de5a3d4758ff0a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [330-10-S99-3](https://asc.understandingaccounting.org/asc/330/10/#330-10-S99-3), SAB Topic 11.F, for SEC Staff views on disclosure of income realized as a result of a last-in, first-out (LIFO) liquidation. Source downloaded (UTC): 2026-09-09T23:51:16.811Z to 2026-09-09T23:51:16.811Z Record version: sha256:67a424d19b324c31db65fe2a39d7f10127c49eecc03f84c9ca16ab7b107ed263 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 330-10-S55: SEC 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/330/10/#sec-55-implementation-guidance-and-illustrations) SEC content: yes #### LIFO Inventory Practices ##### [330-10-S55-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-S55-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:51:16.811Z to 2026-09-09T23:51:16.811Z Record version: sha256:da66a936a84b9969a5f70d47d3abb1f06ab18f17f94fc69300c264d95e528534 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraph [330-10-S99-1](https://asc.understandingaccounting.org/asc/330/10/#330-10-S99-1), SAB Topic 5.L, for SEC Staff views on appropriate last-in, first-out (LIFO) accounting practices. 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.