FASB moves inventory standard toward IAS 2

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25 Nov 2004

The US Financial Accounting Standards Board has amended the US accounting standard on inventories to clarify that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) should be recognised as current-period charges and to require the allocation of fixed production overheads to inventory based on the normal capacity of the production facilities.

US GAAP still permits LIFO, which is no longer allowed under IAS 2. Click for FASB Press Release (PDF 24k). You can download FASB Statement 151 from the FASB Website.

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