Many companies in the UK and Republic of Ireland have inventories (stocks) and work‐in‐progress (WIP) in their balance sheet (statement of financial position) at the year‐/period‐end. Accounting for such assets can cause significant complexities and, as is usually the case for WIP, involves a large degree of estimation on the part of management. The cost of inventories is largely constant and it follows, therefore, that ‘estimated selling price’ is usually the price that a third party would pay in exchange for the goods or services, and hence is company‐specific. There are several elements to the purchase price of inventories such as import duties. There are various methodologies in existence for the measurement of the cost of inventories rather than using actual costs for every type of inventory. Consignment inventories are stock that is legally owned by one party but is held by another.