Inventory valuation principles require historical cost measurement, strict cost inclusion rules, and lower of cost or net realizable value treatment. Sets out the principles for valuation of inventory on a historical cost basis for cost and financial reporting, requiring identification of includible cost elements, consistent classification, and application of the lower of cost or net realizable value test. It prescribes valuation rules for purchased and self-manufactured inventory, packing material, work-in-process, finished goods, scrap, and inventory in transit, while excluding abnormal costs, finance costs, selling and distribution overheads, and other non-qualifying expenses. It also requires presentation, disclosure, and certification of inventory valuation in the prescribed format.