The Canadian Institute of Chartered Accountants has made the capitalization of capital assets optional for organizations with revenues less than $500,000 (see capital assets). There is no similar opportunity for organizations to avoid the capitalization of inventory. Material inventories must be recorded on the balance sheet.

If the inventories are held ’for profit" they would be valued at the lower of cost and their net realizable value. (3031.10) Cost would include all costs incurred in the production or acquisition of the inventory. (3031.11) If the inventory was contributed, cost  would be the fair value on the date of contribution. (3032.03).

If inventory was not held for profit, it would be valued at the lower of cost and replacement cost. (3032.05)

If the inventory items are identical or interchangeable, the expense of costs on relief of inventory can use either the first-in first-out method, or the weighted average cost of all items, method. If they are not interchangeable, each inventory item would be costed individually. (3031.22,.24)

The policies for costing inventory would be disclosed in the notes. The carrying value of inventory held and the expense of inventory would also be disclosed  (3031.35)

The expense of inventory would be recognized when inventory is written down sold, distributed or consumed in the delivery of services, at subsequent reversal of write down would be recognized in the period of reversal. (3031.33)