FASB issues Statement on Inventory Costs.
Statement 151 is the result of a broader effort by the FASB to improve the comparability of cross-border financial reporting by working with the International Accounting Standards Board toward development of a single set of high-quality accounting standards. The FASB and the IASB noted that ARB 43, Chapter 4 and IAS 2, Inventories, are both based on the principle that the primary basis of accounting for inventory is cost. Both of those accounting standards also require that abnormal amounts of idle freight, handling costs, and wasted materials be recognized as period costs; however, the boards noted that differences in the wording of the two standards could lead to inconsistent application of those similar requirements. The FASB concluded that clarifying the existing requirements in ARB 43 by adopting language similar to that used in IAS 2 is consistent with its goals of improving financial reporting in the United States and promoting convergence of accounting standards internationally.
The guidance is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. Earlier application is permitted for inventory costs incurred during fiscal years beginning after Nov. 23, 2004. The provisions of Statement 151 should be applied prospectively.
The statement may be accessed from the FASB's Web site at www.fasb.org.
Additional PCAOB Guidance Published
The AICPA also has published PCAOB Professional Standards and Related Rules (including SEC-Approved Releases and PCAOB Staff Q&A Guidance) (No. 057195CPA01 ). The compilation was developed to supply auditors of public companies with a workable. current and comprehensive source of PCAOB standards on their engagements. For more information on this new product, see page 7.
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|Title Annotation:||accounting & auditing news|
|Date:||Jan 1, 2005|
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