With an eye on simplification, the Financial Accounting Standards Board has taken up a few short-term projects to cut some unnecessarily complexity out of accounting rules and finalized new rules for development-stage entities.
FASB recently decided based on constituent input that it can make some quick improvements to Generally Accepted Accounting Principles by simplifying the measurement of inventory and eliminating extraordinary items from the income statement. The board added a short-term project to allow inventory to be measured at the lower of cost or net realizable value rather than requiring companies to go through a more complex formula to measure inventory. Today companies must consider net realizable value along with replacement cost and net realizable value minus normal profit margin when measuring the value of inventory.
