Public Company Reporting Topics F11-25b
What is the general rule for recognition during interim periods for cost of goods sold?
Same basis as annual reports. However, the following exceptions are applicable:
- Gross profit method may be used to estimate CGS and ending inventory for each interim period
- Liquidation of LIFO base-period inventory, if expected to be replaced by year end, should be charged to CGS at expected replacement cost.
- Temporary declines in inventory market value not recognized, but must recognize other than temporary declines in interim period of decline.
- Planned manufacturing variances should be deferred if expected to be absorbed by year-end.
