ConocoPhillips inventory in 2021 and 2020 according to its consolidated balance sheets was 1,208 (in Millions) (crude oil and natural gas was $647 and materials and supplies was $561) and 1,002 (Crude oil and natural gas was $461 and materials and supplies was $541), respectively (SEC, 2021). The companys inventory consists of raw materials. The majority of its commodity-related inventories are recorded at cost using the LIFO basis and were measured at the lower-of-cost-or-market in the aggregate. LIFO is used to better match current inventory cost or research. The inventories valued on the LIFO basis in 2021 and 2022 are $395 and $282 (in Millions), respectively. The estimated excess of current replacement cost over LIFO cost of inventories was approximately $ 251 million and $87 million at December 31, 2021 and 2020, respectively. Costs include both direct and indirect expenditures incurred in bringing an item or product to its existing condition and location, but not unusual/nonrecurring costs or research and development costs. Materials, supplies and other miscellaneous inventories, such as tubular goods and well equipment, are valued using various methods, including the weighted-average -cost method and the FIFO method, consistent with industry practice.

Replacement costs include direct and indirect costs pertaining to bringing an item or product to its current condition and location, but excludes unusual, nonrecurring costs and, research and development costs. In addition, materials, supplies and other miscellaneous inventories, such as tubular goods and well equipment, are valued using other various methods, including, but not limited to, the weighted-average-cost method and the FIFO method, consistent with industry practice. ConocoPhillips fully disclosed all that is needed regarding its inventory by providing the type of inventory, method of costing and how its recorded. A manufacturer should disclose the categories of its inventory and the method for valuing the inventory (whether it is cost or the lower cost or net realizable value and also the cost flow assumption FIFO, LIFO or weighted average, et.) (AccountingCoach, n.d.).

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