Article

FinREC Issues Proposed Guidance for Inventory Fair Value Measurement

December 3, 2018

The American Institute of Certified Public Accountants’ Financial Reporting Executive Committee (“FinREC”) has proposed new guidance for companies when measuring their inventory’s fair value when purchasing or merging with another company.

Issued as a working draft on November 19, the proposed guidance is meant for Audit and Valuation Guide: Business Combinations. The working draft features non-authoritative guidance and illustration for estimating the fair value of inventory acquired in a business combination under FASB ASC 820, Fair Value Measurement. The proposed guidance also offers general principles and two examples presenting how companies should value finished goods and inventory considered a work in process.

Comments on the proposal are due Friday, February 1, 2019.