IAS 16 – Core inventories

Date recorded:

The project manager clarified that this is an update from the discussion held in March 2014 and to provide feedback received from IASB members. The issue related to the accounting of core inventories. IASB members raised concerns that core inventories would normally be substituted with regular inventories on a continuing basis (suggesting that they should be accounted for as inventories), some members said that core inventories caused PPE to operate rather than bringing PPE to the condition of being capable of operation, some IASB members indicated that core inventory should be included in PPE if its cost could be recovered (see below for clarification), and some members also said that the issue should be addressed because IAS 2 and IAS 16 were principle based standards. Therefore, in July 2014, the staff would present for discussion a definition of core inventories and the scope for the interpretation.

The scope would address cases where IAS2 and IAS16 are overlapping (items that were similar to ordinary inventories but also can bring PPE to operating condition).

The project manager asked if any IC member had any question regarding the feedback received from IASB members.


The chairman explained that the main challenge was to explain why the issue had been raised now.

One IC member asked for clarification whether items would be included in IAS 16 if their cost could be recovered. The staff clarified that core inventories would be included in PPE if their cost could not be recovered (many members shared the same concern).

One IC member asked about unit of account which  did not seem to be addressed.

Another IC member asked if an item would be included in PPE when its cost could not be recovered, it would be necessary to address the interaction with IFRIC 5 decommissioning liability. The chairman agreed.

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