Question

definition of inventory evaluation report

Answer 1

Inventory evaluation report-

Inventory evaluation is the amount of cost associated with an organisation's stock at the end of reporting period during the year end. It includes cost of goods sold and collateral loan valuation. This is recorded under current asset in the balance sheet. Cost considers direct material, direct labour, factory overhead and any other freight charges.

Inventories can be valued by using following methods:

• FIFO- Here we considered the first item to be entered as inventory will be count first.
• LIFO- In this method inventories are sorted out as last item entries.
• Weighted average- where average cost of inventory is used in cost of goods sold.

Inventory valuation report needs to follow IFRS rules and regulations to generate accurate reports to the client. So that there will be no issue during audit verification.

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