The IVS 230 Inventories Exposure Draft was issued last week and is now in consultation for two months until 30 April. The IVSC hope to distribute this Exposure Draft widely to stakeholders throughout the BV profession, since inventory valuations emerged as one of six “gap” areas based on the IVSC’s 2017 research.

The project has been led by the Business Valuation Board, with leadership from Mark Zyla (chair, IVSC Standards Review Board), Andreas Ohl (chair, IVSC Business Valuation Board), and Kevin Prall (technical director, IVSC Business Valuation Board).

Depending on feedback received as part of this consultation process, the IVSC boards would propose issuing a final standard for IVS 230 Inventory in mid-2020, with an effective date no earlier than January 2021.

Valuation of inventory is, of course, most frequently conducted for financial reporting purposes as a result of business combinations. The Exposure Draft outlines two common methods for valuing inventory for these purposes: the replacement cost method (the “bottom-up method”) and the comparative sales method (the “top-down method”).