Now, your company may or may not have inventory, but if it does, it\u2019s not just showing the balances broken into groups that\u2019s expected from this note. Well, it\u2019s that too obviously, but there\u2019s a bit more to it.\u00a0<\/p>\n
Yes, you show your \u201craw materials\u201d and \u201cgoods held for sale\u201d, but what you also should disclose, if applicable, is any goods in transit<\/strong>. It\u2019s the goods you don\u2019t have in your possession at the balance sheet date, but which belong to you by title only (risks relating to the preservation and safety of the goods have gone over from the supplier to you). In case the balance is insignificant it doesn\u2019t need any special mentioning however should it be the other way around it\u2019s worth mentioning what and from where exactly is \u201cin transit\u201d.<\/p>\n \u201cSignificant\u201d is subject to management\u2019s assessment what\u2019s important for the users of the report. Significance is something the management decides is the level of when figures are to be explained in more detail \u2013 either more text to disclose further information or show a separate note to split certain line (i.e. raw materials) into various subgroups.<\/p>\n Technically when it comes to physical inventory there can be two different storing opportunities<\/strong> \u2013 at your own premises and at someone else\u2019s premises. There\u2019s also a third option which is someone else\u2019s goods at your premises, but that\u2019s similar to the last one. You don\u2019t own the goods and someone else is just buying warehousing service more or less from you. Anyhow, in a case where you store your goods somewhere else or someone is outsourcing warehousing from you, this needs to be separately disclosed in the report. If both are the case they are to be disclosed separately as a part of this note.<\/p>\n