News & Events

FASB Focuses on Inventory Disclosures

-by Linda Marie Pearson, CPA, CFE, Principal

Inventory

On January 10, 2017, FASB issued an exposure draft to change the disclosure requirements of inventory. The proposed main provisions include required disclosures for:

  • Disaggregating inventory by component (for example, raw materials, work-in-process, finished goods, and supplies). Note: While many companies already provide this information within their financial statements, it is not a required disclosure.
  • Inventory disaggregate by measurement basis.
  • Changes to the inventory balance that are not specifically related to the purchase, manufacture, or sale of inventory in the ordinary course of business.
  • A qualitative description of the types of costs capitalized into inventory.
  • The effect of last-in, last-out (LIFO) liquidations on income.
  • The replacement cost for LIFO inventory.
  • For inventory reported using the retail inventory method (RIM), qualitative and quantitative information about the critical assumptions used in the calculation of inventory under the RIM.
  • For entities subject to disclosing segment information, inventory by reportable segment and by component for each reportable segment to the extent that such information is regularly provided to the chief operating officer.

The Board is seeking input on the application of the proposed amendments to private companies and not-for-profit organizations. Interested parties may submit comments until March 13, 2017 using this [link].

In addition, the Board plans to hold public roundtable meetings on this exposure draft in the first quarter of 2017. The purpose of the roundtable meetings will be to listen to the views of, and obtain information from, interested stakeholders about the proposed amendments.

For more information on this topic, please contact our office at 401-331-0500 to speak to one of our specialists.