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Analysis of Inventory
Inventory Accounting Policy
Inventories consist of finished goods held for sale and distribution, raw materials and work in process. Inventory includes brand pharmaceutical and medical aesthetic products which represent Food and Drug Administration ("FDA") approved or likely to be approved indications. Inventory valuation reserves are established based on a number of factors/situations including, but not limited to, raw materials, work in process or finished goods not meeting product specifications, product obsolescence, or application of the lower of cost (first-in, first-out method) or market (net realizable value) concepts. The determination of events requiring the establishment of inventory valuation reserves, together with the calculation of the amount of such reserves may require judgment. Assumptions utilized in Allergan’s quantification of inventory reserves include, but are not limited to, estimates of future product demand, consideration of current and future market conditions, product net selling price, anticipated product launch dates, potential product obsolescence and other events relating to special circumstances surrounding certain products. No material adjustments have been required to Allergan’s inventory reserve estimates for the periods presented. Adverse changes in assumptions utilized in Allergan’s inventory reserve calculations could result in an increase to the inventory valuation reserves and higher cost of sales.
Source: 10-K (filing date: 2018-02-16).
Allergan PLC, Statement of Financial Position, Inventory
USD $ in thousands
|Dec 31, 2017||Dec 31, 2016||Dec 31, 2015||Dec 31, 2014||Dec 31, 2013|
|Inventories||Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer.||Allergan PLC’s inventories declined from 2015 to 2016 but then increased from 2016 to 2017 not reaching 2015 level.|