[Verse 1] When goods arrive at your warehouse door IAS 2 tells us what to explore Purchase price plus the costs to bring Transportation, duties, handling fees we sing Recognition happens when control transfers over Legal title shifts from seller to the buyer [Chorus] FIFO flows, first in first out Weighted average spreads the doubt Net realizable value, write it down below Cost of goods sold, watch your profits grow Measure inventory, lower of the two Cost or NRV, IAS 2 [Verse 2] Standard costing helps when prices fluctuate Allocate the fixed costs, don't procrastinate Variable costs follow production levels high and low Fixed costs spread across the normal flow Exclude the selling costs and storage too Only include what brings the goods to you [Chorus] FIFO flows, first in first out Weighted average spreads the doubt Net realizable value, write it down below Cost of goods sold, watch your profits grow Measure inventory, lower of the two Cost or NRV, IAS 2 [Bridge] When selling price falls below the cost Write down inventory, accept the loss Reversal allowed when prices climb back up But never above original cost setup Formula's simple, selling price less costs to complete Less selling expenses makes NRV complete [Verse 3] Opening stock plus purchases made Less closing stock, COGS is displayed Perpetual tracking every single day Periodic counting at month-end way Shrinkage and damage, write off what's gone Financial statements must carry on [Chorus] FIFO flows, first in first out Weighted average spreads the doubt Net realizable value, write it down below Cost of goods sold, watch your profits grow Measure inventory, lower of the two Cost or NRV, IAS 2 [Outro] From raw materials to finished goods IAS 2 does what accounting should Lower of cost or net realizable Makes inventory values verifiable
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