ASC 330 INVENTORY

This chapter provides guidance on the accounting and reporting practices on inventory. It discusses the definition, valuation, and classification of inventory. The accounting for inventories is a major consideration for many entities because of its significance to both the income statement and the statement of financial position. are two types of entities for which the accounting for inventories is relevant: merchandising and manufacturing. In a periodic inventory system, upon acquisition, a purchase account is debited and inventory quantities are determined periodically thereafter by physical count. A perpetual inventory system keeps a running total of the quantity of inventory on hand by maintaining subsidiary inventory records that reflect all sales and purchases as they occur. The identification of cost for merchandise inventory that is purchased outright is relatively straightforward. Inventory cost in a manufacturing enterprise includes both acquisition and production costs.