NOTE F29 Inventories
- 21 NOTE F21 Intangible assets
- 22 NOTE F22 Goodwill and business combinations
- 23 NOTE F23 Property, plant, and equipment
- 24 NOTE F24 Leases
- 25 NOTE F25 Assets held for sale
- 26 NOTE F26 Investments in associates and joint ventures
- 27 NOTE F27 Other investments
- 28 NOTE F28 Impairment of property, plant, and equipment, intangible assets, and equity method investees
- 29 NOTE F29 Inventories
- 30 NOTE F30 Other receivables (current)
- 31 NOTE F31 Provisions
- 32 NOTE F32 Financial instruments and financial risk management
- 33 NOTE F33 Net indebtedness
- 34 NOTE F34 Other liabilities (current)
- 35 NOTE F35 Share-based payments
Cost of inventories includes the purchase, conversion, and other costs incurred in bringing the inventories to their present location and condition. The cost of inventories is determined by using the weighted average cost or first-in, first-out (FIFO) method. Inventories having a similar nature and use are measured using the same cost formula.
Inventories are measured at the lower of purchasing cost (raw materials and merchandise) or production cost (work in progress and finished goods), and net realizable value. Net realizable value represents the estimated selling price, less all estimated costs of completion and the estimated costs necessary to make the sale.
CO2 emission rights
With respect to the mechanism set up by the European Union to encourage manufacturers to reduce their greenhouse gas emissions, the Group was granted carbon dioxide (CO2) emission rights for some of its installations. The Group is also involved in the Clean Development Mechanism (CDM) under the Kyoto protocol. Under these projects, the Group has deployed facilities in order to reduce greenhouse gas emissions at the relevant sites in return for Certified Emission Reductions (CER).
In the absence of any IFRS regulating the accounting treatment of CO2 emission rights, the Group applies the Trade/Production model, according to which CO2 emission rights are presented as inventories if they will be consumed in the production process or as derivatives if they are held for trading. Energy Services is involved in CO2 instrument trading, arbitrage, and hedging activities. The net income or expenses from these activities are recognized in other operating income for the industrial component, where Energy Services sells the CO2 emission rights generated by Solvay, as well as for the trading component, where Energy Services acts as a trader/broker with respect to those CO2 emission rights.