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Abstract
On Jul 15, 2014, the Financial Accounting Standards Board (FASB) issued the proposed Accounting Standards Update, which proposes guidance that would simplify the measurement of inventory. The measurement of inventory is one of the areas that is considered to be too complex because under the requirements in FASB Accounting Standards Codification (ASC) 330, Inventory, inventory is measured at the lower of cost or market value, which could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. The revision of the inventory measurement guidance in ASC 330 also would coincide with the International Accounting Standards Board's guidance in International Accounting Standard 2, Inventories, which requires that inventory be measured at the lower of cost and net realizable value. The guidance related to the methods of estimating the cost of inventory under US GAAP would not be affected by the amendment of ASC 330.