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Inventories Measurement – Between Prudence and Nonprudence

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Author Info

  • Iulia JIANU

    (Bucharest Academy of Economic Studies)

  • Cristina Venera GEAMBAŞU

    (Bucharest Academy of Economic Studies)

  • Ionel JIANU

    (Bucharest Titu Maiorescu University)

Abstract

In accounting, measurement is the process used to determine the value at which the items of financial statements are recognized in accounting and presented in the balance sheet and in the profit and loss account. Starting from the importance of measurement in accounting, the first study objective in this paper brings in the center of discussion the inventories measurement with the purpose to identify the main methods for inventories measurement at exit used by the economic entities listed on EuroNext Paris Exchange Stock. In the present context, when the financial crisis is still felt in the EU countries is important to note the extent to which economic entities demonstrate prudence in accounting by taking into consideration the inventories impairment at balance sheet date. Compliance with the prudence principle to integrate uncertainty in accounting measurement has the purpose to avoid the risk to transfer in the future periods the present uncertainties that are likely to strike the economic entity. One of the main consequences of this principle is to make impairments for inventories. Therefore the second objective of the present paper is to reflect the extent to which the entities under study record impairments for inventories at balance sheet date, as well as to highlight the manner in which is disclosed the information regarding the way the net realizable value can be calculated.

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Bibliographic Info

Article provided by Constantin Brancusi University, Faculty of Economics in its journal Constatin Brancusi University of Targu Jiu Annals - Economy Series.

Volume (Year): 4.II (2010)
Issue (Month): (December)
Pages: 180-195

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Handle: RePEc:cbu:jrnlec:y:2010:v:4.ii:p:180-195

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Keywords: IAS 2; inventories measurement; prudence in accounting; inventories impairment; net realizable value;

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