property held for sale or for use in the manufacture of goods held for sale. Such property does not qualify for capital gains treatment. Examples of inventory are:
• raw materials.
• supplies used in operations.
• finished goods.
There are a number of inventory valuation methods; the most widely used are first in, first out (FIFO) and last in, first out (LIFO). Financial statements normally indicate the basis of inventory valuation, generally the lower figure of either cost or current market price.
Description and Definition of First-in, First-out Inventory Valuation Method (FIFO)
An inventory valuation method that assumes any inventory sold was from the first inventory purchased.
Description and Definition of Inventory
Items held for resale in a business.