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Caterpillar Inc. (CAT) | Analysis of Inventory
Inventory Accounting Policy
Inventories are stated at the lower of cost or market. Cost is principally determined using the last-in, first-out (LIFO) method. The value of inventories on the LIFO basis represented about 60 percent of total inventories at December 31, 2012, about 65 percent of total inventories at December 31, 2011, and about 70 percent at December 31, 2010.
If the FIFO (first-in, first-out) method had been in use, inventories would have been $2,750 million, $2,422 million and $2,575 million higher than reported at December 31, 2012, 2011 and 2010, respectively.
Source: Caterpillar Inc., Annual Report
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Inventory Disclosure
Caterpillar Inc., Statement of Financial Position, Inventory
USD $ in millions
Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009 Dec 31, 2008
Raw materials
3,573 3,872 2,766 1,979 3,356
Work-in-process
2,920 2,845 1,483 656 1,107
Finished goods
8,767 7,570 5,098 3,465 4,022
Supplies
287 257 240 260 296
Inventories
15,547 14,544 9,587 6,360 8,781
Source: Based on data from Caterpillar Inc. Annual Reports
Item Description The company
Raw materials Carrying amount as of the balance sheet date of unprocessed items to be consumed in the manufacturing or production process. Also includes purchased parts that will be used as components of a finished product. Caterpillar Inc.'s raw materials increased from 2010 to 2011 but then slightly declined from 2011 to 2012.
Work-in-process Carrying amount as of the balance sheet date of merchandise or goods which are partially completed, are generally comprised of raw materials, labor and factory overhead costs, and which require further materials, labor and overhead to be converted into finished goods, and which generally require the use of estimates to determine percentage complete and pricing. Caterpillar Inc.'s work-in-process increased from 2010 to 2011 and from 2011 to 2012....