IAS 2: guides and inventory costing model

Plain-English guides to IAS 2, each with a worked example, and a model comparing FIFO, weighted average and LIFO.

IAS 2 measures inventories at the lower of cost and net realisable value. 3 guides and 1 Excel model, all free.

Excel model

Each workbook comes filled in with a worked example, so you can see how it works before replacing the figures with your own. Cells to edit are marked.

Inventory costing comparisonExcel downloadFIFO, weighted average and LIFO side by side from your purchase lots, with the lower of cost and net realisable value test. IAS 2 and ASC 330.

3 guides

IAS 2 inventories explained3 minute readIAS 2 inventories explained: what goes into the cost of inventories, conversion costs and overheads, cost formulas, net realisable value and write-downs.
Cost formulas: FIFO and weighted average3 minute readFIFO vs weighted average cost under IAS 2 with a worked example: cost of sales, closing inventory and gross profit, how LIFO compares, and which to choose.
Net realisable value and inventory write-downs3 minute readNet realisable value under IAS 2: how to calculate NRV, when inventory must be written down, item by item or in groups, and reversing write-downs.

About these guides

The guides explain the standard in our own words, with our own examples, and point to the paragraphs they rely on. They are general information, not advice for your situation. Read them alongside the standard itself, and check when your regulator adopts it.