Inventory Valuation Adjustment
From Open Risk Manual
Definition
Inventory Valuation Adjustment (IVA). The difference between the cost of inventory withdrawals as valued at acquisition cost and the cost of withdrawals as valued at replacement cost.
The IVA adjusts inventories from the change in book value reported by most businesses to the definition of inventories used in the NIPAs and industry accounts - that is, the change in physical volume valued at the average prices for the time period.
The IVA is subtracted from corporate profits and nonfarm proprietors’ income to remove inventory profits or losses from the income reported by businesses. (Up through the 1997 benchmark, the IVA in the I-O accounts has differed from the IVA in the NIPAs by the amount of the LIFO-reserve adjustment.)[1]
References
- ↑ Concepts and Methods of the US Input-Output Accounts. K.J.Horowitz, M.A.Planting, 2009
