Valuation

Inventory valuation under the Swiss COclear method, defensible figure

A stock value worked out by hand in January, without customs costs, changes profit without anyone knowing why. Numezis values every movement with your method, builds in the landed cost of imports and tests market value before the close.

  • FIFO, LIFO, FEFO, average
  • Freight and duty included
  • CO 960c test

Four methods, one value retained

Before the 2026 close, the fiduciary of Alpenwerk Outillage SA (demo) wants to understand the value of 1’200 cartridges of SX-10 sealant. Numezis shows FIFO, LIFO, FEFO and average cost side by side, from CHF 10’032.00 to CHF 10’740.00. FIFO, applied since 2025, stays in place. The latest import from Germany costs CHF 8.95 per unit, freight and duty included, and market value exceeds cost.

  • Comparing methods helps you understand the effect on profit; the method retained does not change during the financial year.
  • Inbound cost includes the price converted at the day's rate, freight and customs duty, allocated across the lines received.
  • Import VAT is recovered as input tax and therefore does not inflate the cost of stock.
  • The lower-of-cost test compares cost with net realisable value, item by item, before the close.
Numezis · Inventory · Valuation of SX-10 sealant

SX-10 silicone sealant, 300 ml cartridge

1’200 cartridges in stock at 31.10.2026

FIFORetained

CHF 10’104.00

CHF 8.42 / unit

LIFO

CHF 10’740.00

CHF 8.95 / unit

FEFO

CHF 10’032.00

CHF 8.36 / unit

Average cost

CHF 10’332.00

CHF 8.61 / unit

FIFO applied since 01.01.2025, with no change during the financial year (CO 958c).

Landed cost of the latest import
Purchase price EUR 8.70 at 0.9368CHF 8.15
Freight to CrissierCHF 0.54
Customs dutyCHF 0.26
Landed unit costCHF 8.95

Import VAT 8.1 % (CHF 0.72 per unit) recovered as input tax, outside cost.

CO 960c test
Value at cost (FIFO)CHF 10’104.00
Net realisable valueCHF 13’680.00
Balance sheet value: CHF 10’104.00No write-down
Value of the same stock under FIFO, LIFO, FEFO and average cost, landed cost of the latest import and the lower-of-cost test under CO 960c.

Swiss controls

The rules for valuing stock

Stock value weighs directly on profit and tax. These checks apply the valuation principles of the Code of Obligations and make every figure traceable back to the purchase document.

  • Value capped at acquisition cost

    CO 960a: inventories are recorded at most at their acquisition or production cost. Numezis does not allow any revaluation above cost.

    Blocked
  • Lower of cost and market value

    CO 960c: if net realisable value is below cost at the balance sheet date, Numezis flags the item and prepares the write-down for approval.

    Flagged
  • Same method from one year to the next

    CO 958c para. 1 no. 6: consistency forbids a change during the year; any future change must be justified and documented in the notes.

    Blocked
  • Acquisition costs allocated on receipt

    Freight, customs duty and clearance fees are part of acquisition cost; they are allocated by weight, value or quantity across the lines received.

    Automatic
  • Import VAT kept out of stock cost

    VAT Act art. 28: VAT collected by the FOCBS on import is deductible as input tax for registered businesses; it is posted separately and never enters stock value.

    Automatic
  • Write-downs approved and traced

    Every value adjustment, write-down or reversal, waits for a manager's approval and stays linked to its calculation, date and author.

    Approval required

A stock value anyone can recompute

Recognised methods, full costs, documented adjustments: everything needed for the balance sheet stock value to be recalculated and justified, item by item.

Four valuation methods

FIFO, LIFO, FEFO and weighted average cost, chosen per item or category. The method applies to every issue, in real time, not only at year end.

Visible cost layers

Every receipt creates a cost layer with its date, remaining quantity and price. You see which layers a delivery consumed and at what price.

Side-by-side simulation

Compare your stock value under all four methods to understand the effect on profit, before deciding with your fiduciary on next year's method.

Landed cost of imports

Freight, insurance, customs duty and forwarding fees are allocated across the receipt lines. The unit cost reflects what the goods really cost you.

Currencies and exchange rates

Purchases in euros or dollars converted at the rate on the receipt date; the exchange difference on the supplier invoice is handled in accounting, not in stock.

Lower-of-cost test

Comparison of cost and net realisable value per item, list of items to write down under CO 960c and the proposed adjustment before the close.

Reliable margin per item

Cost of goods sold is known at every delivery. Margin per item, customer or sales channel can be read every month, not only after the stocktake.

Valuation AI agent

Ask the agent why an item's value changed or which items should be written down: it answers by citing the receipts, rates and sales involved.

Several companies, one group

Each group company keeps its method and stock accounts; intra-group transfers are eliminated on consolidation, with no internal margin on the consolidated balance sheet.

The guide

Guide to inventory valuation in Switzerland

Inventory valuation drives a large share of a trading or manufacturing SME's profit. This guide explains the rules of the Code of Obligations, the accepted methods, the treatment of import costs and the room for manoeuvre on tax, with examples from Swiss practice.

What inventory valuation rules does the Swiss CO set?

The Code of Obligations sets three principles for inventory valuation. First, the ceiling: under art. 960a CO, inventories are recorded at most at their acquisition or production cost. Second, prudence: under art. 960c CO, if net realisable value, that is the expected selling price less the costs still to be incurred, is below cost at the balance sheet date, that lower value applies.

Third, consistency: art. 958c para. 1 no. 6 CO requires valuation methods to stay the same from one year to the next. A change is possible if justified, but it must be explained in the notes. Inventories are in principle valued individually, but the CO allows valuation by groups of similar items. Numezis applies these three principles to every movement, not once a year on an exported list.

FIFO, LIFO or average cost: which method should you choose?

With FIFO, first in, first out, issues consume the oldest purchases first: remaining stock is valued at the most recent prices. With LIFO, last in, first out, it is the opposite: stock keeps the old prices. Weighted average cost recalculates an average price at each receipt. FEFO, first expired, first out, follows expiry dates and suits perishable goods.

When prices rise, LIFO gives a lower stock value and therefore a lower profit, while FIFO gives a value closer to current prices. LIFO is accepted under Swiss accounting law but excluded under IFRS; under Swiss GAAP FER, check with your fiduciary. Average cost smooths fluctuations and remains the most common choice in SMEs. What matters is to choose a method that fits your real flows, then to stick with it.

How do you calculate the landed cost of an imported item?

The acquisition cost of an imported item is not limited to the price on the supplier's invoice. It also includes freight to your warehouse, transport insurance, customs duty, and forwarder and clearance fees. These costs must be allocated to the items received, by weight, volume, value or quantity depending on their nature.

Take a sealant bought at EUR 8.70 per unit, converted to CHF 8.15 at the day's rate. With CHF 0.54 of freight and CHF 0.26 of customs duty per unit, the landed cost is CHF 8.95. Import VAT of 8.1 %, collected by the FOCBS, is not part of it: a VAT-registered business recovers it as input tax. Numezis attaches the forwarder's invoice and the assessment notice to the receipt, allocates the costs automatically and updates the item's cost layer.

When must stock be written down under art. 960c CO?

A write-down is required as soon as an item's net realisable value falls below its cost at the balance sheet date. Typical causes are a lasting drop in selling prices, an outdated product or one replaced by a new model, damaged goods, an approaching expiry date or dead stock that will only sell at a heavy discount.

Net realisable value is calculated from the expected selling price, less the costs still needed to sell: discount, transport, commission. Numezis compares this value with each item's cost and produces the list of write-downs to consider, with the evidence behind them: turnover, latest sales, batches nearing expiry. The adjustment is prepared but only posted after approval. A write-down that is no longer justified can be reversed, up to the original cost.

What about the one-third goods reserve and hidden reserves?

In addition to the write-downs required by art. 960c CO, Swiss tax practice accepts in most cantons a flat-rate write-down on merchandise stock, known as the "one-third goods reserve" (Warendrittel): up to one third of the inventory value at cost or lower market value. This hidden reserve reduces taxable profit in the year it is created.

Two conditions are essential: a complete inventory list and an exact base value. The reserve is calculated on that base and must be tracked from year to year, because releasing it increases profit. Numezis provides the base value item by item and clearly separates the economic value of stock, the CO write-downs and the flat-rate reserve. The amount remains a decision to take with your fiduciary, according to your canton's practice.

Questions about inventory valuation

The questions finance managers and fiduciaries ask about the method and the figures.

Can different items use different methods?

Yes. The method is chosen per item or category: FEFO for perishable goods, FIFO for standard merchandise, average cost for raw materials, for example. Once the financial year is open, each item's method stays fixed, in line with the CO's consistency principle. Any change is prepared for the following year.

Is customs duty part of the cost of stock?

Yes. Customs duty, freight, transport insurance and clearance fees are part of acquisition cost. Numezis allocates them across the receipt lines. Import VAT, however, is recoverable as input tax for a VAT-registered business and therefore does not enter the stock value.

What is the four-method comparison for?

To understand the effect of each method on stock value and profit, for example before choosing the method for a new company or a new financial year. The comparison has no effect on the accounts: only the method retained is applied and posted, and it does not change during the year.

How does Numezis spot items to write down?

By comparing, for each item, the cost in stock with net realisable value, calculated from the latest selling prices and selling costs. It adds indicators: no movement for six or twelve months, batches nearing expiry, falling selling prices. The list is proposed; the decision stays yours.

Is the stock value up to date during the year?

Yes. With perpetual inventory, every receipt and every issue is valued at the time of the movement. Stock value, cost of goods sold and margin per item are therefore known every day. Your monthly or quarterly closes reflect reality instead of an estimate.

How does my fiduciary check the stock value?

With read-only access, they see the valued inventory list, each item's method, the cost layers, the allocation of import costs, the write-downs and the reconciliation with the stock account. They can trace every amount back to the supplier invoice and the FOCBS assessment notice.

A stock value you can explain

Choose your methods, let Numezis build in freight and duty, and reach the close with a value your fiduciary can recompute without surprises.