The inventories of returned property are those assets that come from an early termination of a lease (returned property s) or those upon which the lease has already concluded (premises and equipment), which are expected to be sold in the normal course of business. These are controlled by the Bank and are expected to generate future economic benefits.
The inventory of returned property is recognized as an asset from the date in which the Bank assumes the risks and benefits of the inventories. The cost of it can be reliably measured and it is probable that it will generate future economic benefits.
The inventories of returned property are valued using the specific identification method and their costs include the carrying value at the time the asset is returned.
The carrying value of returned property is measured at the lower of cost and net realisable value (NRV). The net realisable value is the estimated selling price in the ordinary course of business less its estimated costs to make the sale. The adjustment in the carrying value to reflect the NVR, is recognized in the statement of income of the period in which the goods are returned. The value of any reversion that comes from an increase in the NVR in which the increase occurs is recognized as a lower expense in the period.
Other new inventories are measured initially at acquisition cost which comprises the sum of the purchase price, the import costs (if applicable), the non-recoverable taxes paid, the storage, the transport costs, and other attributable or necessary costs for their acquisition, less discounts, reductions or similar items. Those inventories do not include selling costs.
The Bank must review the NRV of its inventories, at least annually or whenever necessary by market conditions. Any write-down adjustment must be recognized directly in the statement of income.
