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U.S. comment letter on simplifying the measurement of inventory

Published on: Sep 30, 2014

Deloitte & Touche LLP has commented on the proposed Accounting Standards Update, Simplifying the Measurement of Inventory, issued by the FASB in July 2014.

An excerpt from the comment letter is shown below:

We support the Board’s efforts to quickly make improvements to areas of U.S. GAAP that are unnecessarily complex and costly as part of its simplification initiative. In our December 19, 2013, comment letter to the FASB about narrow issues involving unnecessary complexity, we discussed the exceptions to the general guidance on using the lower of cost or market under ASC 330-10-15 and noted that determining market under the guidance requires the use of a complex set of paths involving ceilings and floors. Accordingly, we suggested that inventories be subsequently measured at the lower of cost or net realizable value (as defined in the Codification Master Glossary) to eliminate the complex analyses and exceptions to general principles. Accordingly, we agree with the updates in the proposed ASU, and we appreciate that they will achieve greater convergence between U.S. GAAP and IFRSs.

Full text of the comment letter is available below.


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