Inventory Accounting Policy
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out method. Cost comprises direct production costs such as raw materials, consumables and labour as well as production overheads such as employee wages, depreciation, maintenance etc. The production overheads are measured based on a standard cost method, which is reviewed regularly to ensure relevant measures of utilisation, production lead time, etc.
If the expected sales price less completion costs and costs to execute sales (net realisable value) is lower than the carrying amount, a write-down is recognised for the amount by which the carrying amount exceeds its net realisable value.
Inventory manufactured prior to regulatory approval is capitalised as an asset but provided for until there is a high probability of regulatory approval of the product. Before that point a provision is made against the carrying amount to its recoverable amount and recorded as R&D costs. At the point when a high probability of regulatory approval is obtained, the provision recorded is reversed, up to no more than the original cost.
Source: Novo Nordisk A/S, Annual Report
Inventory Disclosure
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Novo Nordisk A/S, Statement of Financial Position, Inventory
USD $ in millions, translated from DKK kr
Source: Based on data from Novo Nordisk A/S Annual Reports
| Item |
Description |
The company |
| 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. |
Novo Nordisk A/S's raw materials declined from 2009 to 2010 but then increased from 2010 to 2011 exceeding 2009 level.
|
| Work in progress |
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. |
Novo Nordisk A/S's work in progress declined from 2009 to 2010 and from 2010 to 2011.
|
| Finished goods |
Carrying amount as of the balance sheet date of merchandise or goods held by the company that are readily available for sale. |
Novo Nordisk A/S's finished goods increased from 2009 to 2010 and from 2010 to 2011.
|
| Inventories, net |
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). |
Novo Nordisk A/S's inventories, net declined from 2009 to 2010 and from 2010 to 2011.
|
