7.4 Presentation and Disclosure

Inventories are required to be disclosed as a separate item on the company’s balance sheet. As well, significant categories of inventories should be disclosed, such as raw materials, work in process, and finished goods. As with any significant balance sheet item, the company’s accounting policies for measuring and reporting inventories, including its chosen cost formula, should be disclosed.

The company should also disclose the amount of inventories recognized as an expense during the period. This would normally be disclosed as cost of goods sold, but there may be other material amounts that could be disclosed separately, such as write-downs due to obsolescence and subsequent reversals of those write-downs.

As well, under IFRS, additional details of the write-downs need to be disclosed, such as qualitative reasons for the write-downs or subsequent reversal. If the inventory has been pledged as collateral for any outstanding debt, this fact needs to be disclosed, along with the amount pledged.