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Operating Assets, Liabilities, and Contingent Liabilities

(24) Inventories

Accounting and measurement policies

In addition to directly attributable unit costs, the cost of sales also includes overheads attributable to the production process, which are determined on the basis of normal capacity utilization of the production facilities. Goods for resale are recognized at cost. The “first-in, first-out” (FIFO) method is used to determine the amortized cost of manufactured, finished, and unfinished materials, raw materials, and merchandise. The weighted average cost formula is applied for items such as supplies.

Inventories are tested for impairment using a business-sector-specific method. Under this method, cost is compared to the net realizable values. If the net realizable value is lower than the amortized cost, the asset is written down by a corresponding amount, which is recognized as an expense in the cost of sales.

Impairments may be due to factors relating to the sales market, qualitative reasons, a lack of usability of the items, or their limited remaining shelf life. If the reason for impairment no longer applies, the carrying amount is adjusted to the lower of cost or the new net realizable value.

Since inventories are, for the most part, not manufactured within the scope of long-term production processes, borrowing costs are not included.

Inventory prepayments are reported under other non-financial assets.

Significant discretionary decisions and sources of estimation uncertainty
Identification of impairments or reversal of impairments

Discretionary decisions are required in the identification of impairment as well as in identifying the need to reverse impairment of inventories. There are estimation uncertainties with respect to the calculation of the net realizable value. In particular, changes in selling prices and expected costs of completion are considered in calculating this value.

Inventories consisted of the following:

€ million


Dec. 31, 2023


Dec. 31, 2022

Raw materials and supplies





Work in progress





Finished goods/goods for resale










Measures to optimize inventory levels contributed to the reduction in inventories in the Life Science business sector. This was offset by an increase in the Healthcare business sector and in the Electronics business sector.

Impairment losses included in the cost of sales are shown in Note (10) “Cost of sales”.

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