FASB Proposes Updates for Inventory Measurement
The Financial Accounting Standards Board (FASB) has issued two standards updates with the intention of simplifying the measurement of inventory and eliminating the requirement for extraordinary items. Inventory (Topic 330): Simplifying the Measurement of Inventory would eliminate existing requirements to consider the replacement cost of inventory and the net realizable value of inventory less an approximately normal profit margin. This change is intended to reduce the cost and complexity of the subsequent measurement of inventory and increase consistency. Income Statementâ€”Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items would remove the concept of extraordinary items from GAAP. This change is intended to reduce costs and save time for preparers who would not normally evaluate whether an event or transaction was extraordinary. You can read the proposals in further detail at the link below. Comments on the proposals are due by September 30, 2014.