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What if it isn't practicable to disclose major classes of inventory?

David Westbrook's Profile

I am a contractor on assignment assisting a chemical company with their 10-Q filings. A SEC requirement is to "state separately in the balance sheet or in a note thereto, if practicable, the amounts of major classes of inventory". The company's inventory is primarily considered finished goods but they do repackaging, blending and manufacturing of certain products.  However, there is no way to verify which items are raw materials versus finished goods as all chemicals could and are sold as finished goods. Currently the company classifies all inventory as Finished Goods but this seems to be somewhat misleading.  Is this appropriate or should it be just labeled as "Inventory" in both the balance sheet and notes.  The company uses LIFO for inventory valuation.


(Owner) |

If the client cannot determine the status of its inventory and related costs then you have bigger fish to fry

Topic Expert
Barrett Peterson
Title: Senior Manager, Actg Stnds & Analysis
Company: TTX
(Senior Manager, Actg Stnds & Analysis, TTX) |

In most industries, raw materials can be, and may be, sold to others. The classification should reflect the intent of management, which may include raw materials [expected to be converted in manufacturing], materials held for re-sale, and fininshed goods.


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