The valuation of inventory in Montenegro is regulated by the Accounting Law (“Official Gazette of Montenegro” No. 52/16) as well as the Regulation on the Methodology for the Valuation of Assets (“Official Gazette of Montenegro” No. 64/18), in line with the application of International Accounting Standards.
International Valuation Standards (IVS)
- International Valuation Standard 230 (IVS 230) – Inventory
Inventory of materials, merchandise, work in progress, and finished products represents the most significant portion of business assets and the largest item in financial statements for most business entities.
Expertly conducted inventory valuation is important because:
- can help maximize profitability;
- ensures that the company can accurately represent the value of inventory in its financial statements;
- the method of valuing inventory directly affects the selling price of goods, and thus gross revenue and the monetary value of remaining inventory;
- the valuation of remaining inventory affects the potential value of the company;
- the method used to value inventory directly impacts gross profit and the income statement, providing companies and investors with insight into financial performance.
Our team uses different valuation methods depending on the approach to valuation:
- Market Approach
- Method of Direct Price Comparison
2. Income Approach
- Top-Down Approach
- Bottom-Up Approach
3. Cost Approach
- Method of Replacement Cost
- Method of Reproduction Cost
In our long-standing practice, we have noticed numerous irregularities in inventory balancing and valuation that carry over into subsequent years of operation. Therefore, it is crucial that your inventory assessment is conducted by a skilled team with extensive experience in this field.
