Inventories include the goods and materials in stock that are intended for the manufacturing process or sale. It can be rated:
According to commercial law, basically at acquisition cost or production cost. If the stock exchange or market price or the value to be assigned to the objects on the balance sheet date is lower than the acquisition or production costs, this is strictly applicable Lowest value principle, ie the lower value must be applied (Section 253, Paragraph 3, Clause 1 of the German Commercial Code). There are no fundamental differences here compared to the regulations under IFRS.
According to tax law, the acquisition or production costs are also the upper limit. If the part is lower, it can be applied, but does not have to be (Section 6 (1) No. 2 EStG). However, this option has no practical significance, since the lower valuation rates in the commercial balance sheet are always relevant for the tax balance sheet if no compelling tax regulations require other valuation rates.
Fixed value principle
In the case of purchased inventories, they are valued at acquisition costs, which do not allow any leeway for valuation. The fixed value principle applies. On the other hand, there is a margin of appreciation for unfinished and self-made finished products due to the right to choose Overhead when determining the manufacturing value.