2011   Financial Report of the United States Government

Notes to the Financial Statements

Note 7. Inventories and Related Property, Net

Inventories and Related Property as of September 30, 2011, and 2010
 
Defense
All Others
Total
Defense
All Others
Total
(In billions of dollars)
2011
2010
Inventory purchased for resale 65.1 0.6 65.7 81.2 0.7 81.9
Inventory and operating material and supplies held for repair 48.3 0.6 48.9 46.5 0.6 47.1
Inventory—excess, obsolete, and unserviceable 7.8 - 7.8 8.4 0.1 8.5
Operating materials and supplies held for use 131.4 2.7 134.1 131.6 2.3 133.9
Operating materials and supplies held in reserve for future use - 0.2 0.2 - 0.4 0.4
Operating materials and supplies excess, obsolete, and unserviceable 2.2 0.1 2.3 2.6 0.1 2.7
Stockpile materials - 48.6 48.6 - 49.0 49.0
Stockpile materials held for sale 0.5 0.2 0.7 0.6 0.2 0.8
Other related property 1.7 0.9 2.6 1.0 0.9 1.9
Allowance for loss (14.5) (0.3) (14.8) (39.7) (0.3) (40.0)
  Total inventories and related property, net 242.5 53.6 296.1 232.2 54.0 286.2

Inventory purchased for resale is the cost or value of tangible personal property purchased by an agency for resale. As of September 30, 2011, DOD values approximately 87 percent of its resale inventory using the moving average cost (MAC) method. An additional 9 percent (fuel inventory) is reported using the first-in-first-out method. DOD reports the remaining 4 percent of resale inventories at an approximation of historical cost using LAC adjusted for holding gains and losses. The LAC method is used because DOD's legacy inventory systems do not maintain historical cost data.

Please refer to the individual financial statements of DOD for significant detailed information regarding its inventories.

Inventory and operating materials and supplies held for repair are damaged inventory that require repair to make them suitable for sale (inventory) or is more economical to repair than to dispose of (operating materials and supplies).

Inventory—excess, obsolete, and unserviceable consists of:

Excess, obsolete, and unserviceable inventory is reported at net realizable value.

Operating materials and supplies held for use are tangible personal property to be consumed in normal operations.

Operating materials and supplies held in reserve for future use are materials retained because they are not readily available in the market or because they will not be used in the normal course of operations, but there is more than a remote chance they will eventually be needed. DOD, which accounts for most of the reported operating materials and supplies held for use, uses LAC, MAC, and Standard Price and expenses a significant amount when purchased instead of when consumed.

Operating materials and supplies—excess, obsolete, and unserviceable consists of:

DOD, which accounts for most of the reported excess, obsolete, and unserviceable operating materials and supplies, revalues it to a net realizable value of zero through the allowance account.

Please refer to the individual financial statements of DOD for significant detailed information regarding operating materials and supplies.

Stockpile materials include strategic and critical materials held in reserve for use in national defense, conservation, or national emergencies due to statutory requirements; for example, nuclear materials and oil, and stockpile materials that are authorized to be sold. The majority of the amount reported by DOD is stockpile materials held for sale, and the amount reported by others is stockpile materials held in reserve, with the majority of it being reported by the Department of Energy (DOE). Please refer to their individual financial statements for more information on stockpile materials.

Other related property consists of the following:


Last Updated:  February 16, 2012