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Home > Business & Careers > Accounting   »   Accounting for Inventory

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Old Dec 30, 2007, 07:04 PM
gwmcmullen
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Accounting for Inventory
I have a small Residential construction company and for the first time I have a completed house that's no longer WIP but inventory for sale. Although this is real estate it's inventory held for sale and not a fixed asset for my company. My problem comes in recording the value of this complete product in inventory. If this inventory is recording at FMV there is a mark up from my manufacturing cost. If recorded at cost it understates the true value on the balance sheet. How is this transaction recorded according to GAAP.

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Old Dec 30, 2007, 10:22 PM   #2  
CaptainForest
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Under GAAP, inventory is recorded at the lower of cost or market.

So if the cost if 100,000 and the FMV is 200,000, you record it at 100,000
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