Viewpoints: Inventory costing – Below normal capacity (Mining)

Find out how a mining entity can allocate its fixed production overheads in periods of abnormally low production.

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This document was developed by Chartered Professional Accountants of Canada (CPA Canada) and the Prospectors and Developers Association of Canada (PDAC).

You will learn about:

  • the scope of IAS 2 Inventories, in regards to the allocation of fixed production overheads
  • determining normal capacity
  • views on how to account for unallocated fixed production overheads during periods of:
    • production ramp-up
    • labour strikes
    • maintenance
    • other technical difficulties
  • assessment of normal capacity
  • disclosure of judgments