IAS 2 - Inventories is a fundamental standard under the International Financial Reporting Standards (IFRS). The standard provides detailed guidance on measuring and reporting inventories in an entity's financial statements. Specifically, it prescribes procedures for determining the cost of inventories, including how to allocate overheads and determine the cost of items using methods like FIFO (First In, First Out) or weighted average cost, as well as how to write down inventories to their net realizable value (NRV) when necessary for impairment. Inventories, as defined by the standard, include assets held for sale in the ordinary course of business, being produced for sale, or to be consumed in the production process or in the rendering of services. An example of applying IAS 2 is when a company evaluates its year-end stock of goods and determines the financial value to be reflected in their balance sheet. Adherence to IAS 2 ensures that inventory valuations faithfully represent the true economic costs and values.