Inventory is included in the statement of financial position at:
the lower of (Cost) or (Net realizable value)
Cost
cost includes " all costs of purchase, costs of conversion and costs incurred in bringing the inventories to their current location and condition"
this includes,
cost of purchase——material costs, import duties, freightcost of conversion-this includes direct costs and production overheads(depreciation of productive machinery/buildings is included here)
The following costs should be excluded from the cost of inventories:
selling costs,storage costs,costs of abnormal wastage and administrative overheads.
