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Analysis of Inventory

Difficulty: Advanced


Inventory Accounting Policy

Inventories are stated at the lower of cost (first-in, first-out basis) or market. Cost includes material and conversion costs.

Source: Abbott Laboratories, Annual Report


Inventory Disclosure

Abbott Laboratories, Statement of Financial Position, Inventory

USD $ in millions

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Finished products 2,339  1,624  1,744  1,807  1,866 
Work in process 472  294  316  278  349 
Materials 790  516  539  558  478 
Inventories 3,601  2,434  2,599  2,643  2,693 

Source: Based on data from Abbott Laboratories 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. Abbott Laboratories's finished products declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
Work 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. Abbott Laboratories's work in process declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
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. Abbott Laboratories's materials declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
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). Abbott Laboratories's inventories declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.