Practical aspects of applying the new accounting treatment of inventories

Abstract

Subject. As stipulated in Federal Accounting Standard 5/2019 – Inventories, which is to enter into effect in 2021 and apply to respective financial statements, inventories are now accounted for in a different way. Federal Accounting Standard 5/2019 introduces new clauses and provides for some requirements concerning the use of discounted estimates and recognition of impairment of inventories. Therefore, we study the clauses and display how they should be implemented. Objectives. We herein analyze clauses of Federal Accounting Standard 5/2019 – Inventories, which may be construed ambiguously. We also provide our suggestions on the reasonable use of novelties introduced by the standard. Methods. The study is based on the systems analysis and logic generalization of legislative and regulatory documents and special literature on the respective issues. Results. Our examples demonstrate how the acquisition of inventories should be recognized in case of the long-term deferral of payment and valuation of inventories upon their recognition. Conclusions and Relevance. The adoption of Federal Accounting Standard 5/2019 dictates for amending corporate accounting policies and preliminary work to revisit some aspects of inventories accounting. Hence, it is reasonable to give methodological clarifications on some complicated practical issues. The findings are intended for scientific and practical activities, training of experts in accounting and financial management. They also may help make suggestions on the improvement of the Russian accounting technique for the convergence with the contemporary international practice.