What is the difference between IFRS & USGAAP with respect to Inventory?

• Under IFRS inventories are valued at Cost or Net Realisable Value (NRV) whichever is lower whereas under US GAAP, it's valued at cost or market value, market value being the current replacement cost. If the market value happens to be more than the NRV then, NRV is compared with the cost of the inventory. Market value i.e the current replacement cost again cannot be less than the NRV as reduced by the normal sales margin.

• Under IFRS only FIFO and weighted average method of inventory valuation is allowed. US GAAP on the other hand allows the use of LIFO method as well for that purpose.

• Under IFRS reversal of previously recognised impairment loss is allowed but only to the extent of the original impairment loss so recognised, when the reason of such impairment ceases to exist. On the other hand under US GAAP, any value of inventory written down to the lower of cost or market value as discussed above, cannot be reversed. 

The lower of cost versus market (LCM) controversy regarding inventory cost measurement is

presented. The differences between International Financial Reporting Standards (IFRS) and

United States (US) Generally Accepted Accounting Principles (GAAP) are analytically compared.

The link between US federal tax law and US GAAP is emphasized relative to a discussion of

deferred taxes and potential US federal income tax revenue.