Main Points Of Proposed Accounting Standards (330)
Proposed Accounting Standards Update 2017-210 – Inventory (Topic 330)
Summary of Main Points of Proposed ASU 2017-10
Accounting Standards Codification (ASC) 330 provides the provisions mandated by Generally Accepted Accounting Principles (GAAP) for the accounting and disclosure requirements for inventory. Inventory represents products held for resale and has financial significance because it is deemed a current asset on a company’s balance sheet and the reported amount affects cost of goods sold. Thus, its accurate measurement is important for meaningful financial statements. As part of the Financial Accounting Standards Board’s (FASB) disclosure framework project, FASB released for public comments a proposed accounting standards update
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Another modification is that Section 330-10-50-1 indicates the basis for stating inventories shall be consistently applied and disclosed in the financial statement but this section is superseded by Sections 330-10-50-1A and 330-10-50-1B. Section 330-10-50-1A no longer requires entities to provide required disclosures if the disclosures are immaterial and Section 330-10-50-1B requires notes in the financial statement that may be useful to financial statement users such as how inventory recorded using different measurement methods may affect the decision usefulness of information for projecting future cash flows. Paragraphs 330-10-50-1 Basis for Stating Inventories, 50-2 Losses from Application of Lower of Cost or Market, 50-3 Goods Stated Above Cost, 50-4 Stating Inventories at Sales Prices, 50-5 Losses on Firm Purchase Commitments, and 50-6 Discourse of Significant Estimates is superseded with Paragraph 330-10-50-7 Changes in Inventory (FASB, n.d.) under the proposed
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