Changes in inventories (P.52)

3.117 Definition:

Changes in inventories are measured by the value of the entries into inventories less the value of withdrawals and the value of any recurrent losses of goods held in inventories.

3.118 Due to physical deterioration, or accidental damage or pilfering, recurrent losses may occur to all kinds of goods in inventories, such as:

  1. losses of materials and supplies;
  2. losses in the case of work-in-progress;
  3. losses of finished goods;
  4. losses of goods for resale (e.g. shoplifting).
3.119 Inventories consists of the following categories:
  1. materials and supplies:

    materials and supplies consist of all commodities held in stock with the intention of using them as intermediate inputs in production; this includes commodities held in stock by the government. Items such as gold, diamonds, etc. are included when intended for industrial use or other production;

  2. work-in-progress:

    work-in-progress consists of output produced that is not yet finished. It is recorded in the inventories of its producer. It can take a variety of different forms, e.g.:

    (1) growing crops;

    (2) maturing trees and livestock;

    (3) uncompleted structures (except those produced under a contract of sale agreed in advance or on own-account which are treated as fixed capital formation);

    (4) uncompleted other fixed assets, e.g. ships and oil rigs;

    (5) partially completed research for a legal or consultant's dossier;

    (6) partially completed film productions;

    (7) partially completed computer programs.

    Work-in-progress must be recorded for any production process that is not finished at the end of the given period. In particular, this is significant in quarterly accounts, e.g. agricultural crops not being completed within a quarter of a year.

    Reductions in work-in-progress take place when the production process is completed. At that point, all work-in-progress is transformed into a finished product.

  3. finished goods:

    finished goods as part of inventories consist of outputs that their producer does not intend to process further before supplying them (also when supplied for intermediate input into other processes of production);

  4. goods for resale:

    goods for resale are goods acquired for the purpose of reselling them in their present state.