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Inventories Policy

Authority:
GASB Codification, Section 1600.127a

Effective Date:
7/1/95; Revised 1/16/09

References:
Please refer to the Chart of Accounts: Inventories 116AAA

Background:
The inventories of the State and component units are valued at cost using either the first-in, first-out, last invoice cost, or average cost method. These inventories consist of general supplies and materials. Institutions of the UNC system and community colleges also use these valuations along with the retail inventory method for some bookstore operations. The State Highway Fund (special revenue fund) accounts for its maintenance and construction inventories using the average cost method.

Inventories for governmental, proprietary and component units are recorded using the consumption method. This method records the inventory as expenses or expenditures when consumed.

Policy:
At year end, all inventories that exceed $1,000.00 in value must be recorded or adjusted as of 6/30/XX. Where inventories are distributed among several locations, the cumulative total value should be considered in determining materiality. The exception to the foregoing is postage. Because of its liquidity, postage must be recorded when it exceeds $100.00 in value. At year-end, inventories for governmental funds should be reported in the balance sheet as an asset.