Inventory Accounting Policy
Inventories are carried at the lower of cost and net realizable value. Cost is determined using the first-in, first-out (“FIFO”) method or average cost method. Costs of production in process and finished goods include the purchase costs of raw materials and conversion costs such as direct labor and an allocation of fixed and variable production overheads. Raw materials and spare parts are valued at cost inclusive of freight and shipping and handling costs. Net realizable value represents the estimated selling price at which the inventories can be realized in the normal course of business after allowing for the cost of conversion from their existing state to a finished condition and for the cost of marketing, selling, and distribution. Costs incurred when production levels are abnormally low are capitalized as inventories based on normal capacity with the remaining costs incurred recorded as a component of cost of sales in the statement of operations.
Source: ArcelorMittal, Annual Report
Inventory Disclosure
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ArcelorMittal, Statement of Financial Position, Inventory
Source: Based on data from ArcelorMittal Annual Reports
| Item |
Description |
The company |
| Finished products |
Carrying amount as of the balance sheet date of merchandise or goods held by the company that are readily available for sale. |
ArcelorMittal's finished products declined from 2008 to 2009 but then slightly increased from 2009 to 2010.
|
| Production in process |
Carrying amount as of the balance sheet date of merchandise or goods which are partially completed, are generally comprised of raw materials, labor and factory overhead costs, and which require further materials, labor and overhead to be converted into finished goods, and which generally require the use of estimates to determine percentage complete and pricing. |
ArcelorMittal's production in process declined from 2008 to 2009 but then increased from 2009 to 2010 not reaching 2008 level.
|
| Raw materials |
Carrying amount as of the balance sheet date of unprocessed items to be consumed in the manufacturing or production process. Also includes purchased parts that will be used as components of a finished product. |
ArcelorMittal's raw materials declined from 2008 to 2009 but then slightly increased from 2009 to 2010.
|
| Manufacturing supplies, spare parts and other |
Carrying amount as of the balance sheet date of products used directly or indirectly in the manufacturing or production process, which may or may not become part of the final product. May also include items used in the storage, presentation or transportation of physical goods. |
ArcelorMittal's manufacturing supplies, spare parts and other declined from 2008 to 2009 and from 2009 to 2010.
|
| Inventories |
Carrying amount (lower of cost or market) as of the balance sheet date of inventories less all valuation and other allowances. Excludes noncurrent inventory balances (expected to remain on hand past one year or one operating cycle, if longer). |
ArcelorMittal's inventories declined from 2008 to 2009 but then slightly increased from 2009 to 2010.
|
