Inventory Value

Inventory should include the following:

• Merchandise or stock in trade
• Raw materials
• Work in process
• Finished products
• Supplies that physically become a part of the item intended for sale

Also, the following merchandise should be included in inventory:

• Purchased merchandise if title has passed to you even if the merchandise is in transit to you or you do not have physical possession of it for another reason
• Goods under contract for sale that you have not yet segregated and applied to the contract
• Goods out on consignment
• Goods held for sale in display rooms, merchandise mart rooms, or booths located away from your place of business

Don't include the following merchandise in inventory:

• Goods you have sold, but only if title has passed to the buyer
• Goods consigned to you
• Goods ordered for future delivery if you do not yet have title

Here are some additional items that shouldn't be included in inventory:

• Land, buildings, and equipment used in your business
• Notes, accounts receivable, and similar assets
• Supplies that do not physically become part of the item intended for sale