Inventory taking and inventory valuation 2026 – regulations, obsolescence, and the 97 percent rule
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Short answer: Companies subject to bookkeeping requirements must conduct a physical inventory of stock and draw up a list that makes the inventory value verifiable. For financial reporting, the lower of cost or market principle normally applies: each inventory item is valued at the lower of its acquisition cost and net realizable value, with specific rules for items such as obsolescence and tax-based valuation.
What should be documented during the inventory?
The inventory law requires a list where each inventory item and the value at which it is recorded can be tracked. The Swedish Tax Agency also states that the inventory list must include a declaration that no inventory assets have been omitted.
| Information | Example |
|---|---|
| Article/item | Article number and description |
| Quantity | Number, weight, or other relevant quantity |
| Acquisition value | Purchase price and relevant acquisition costs |
| Net realizable value | Expected sales value less selling costs |
| Obsolescence | Damaged, outdated, or hard-to-sell inventory |
| Final value | Value used in annual accounts and tax basis |
Lower of cost or market principle
Inventory must normally be valued at the lower of the acquisition cost and the net realizable value on the balance sheet date. Obsolete goods may therefore need to be written down when the actual sales value is lower.
What is the 97-percent rule?
The alternative tax rule may in certain situations allow for valuation at 97 percent of the inventory's total acquisition value. It cannot be combined arbitrarily with valuation at net realizable value and does not apply to all types of inventory assets. Therefore, check the prerequisites before applying the rule.
Step-by-step guide
- Freeze or document inventory transactions around the time of the physical count.
- Count and identify all inventory items.
- Reconcile the physical quantity against the inventory system.
- Calculate the acquisition value according to the applicable regulatory framework.
- Assess net realizable value and obsolescence.
- Document discrepancies, adjustments, and the valuation method.
- Sign the inventory documentation and archive it together with the year-end financial statements.
Common mistakes
- Counting quantities but failing to document the valuation.
- Forgetting inventory held by third parties or goods in transit when they economically belong to the company.
- Using the 97-percent rule while simultaneously valuing parts of the inventory in a way that is not compatible with the rule.
- Lacking supporting documentation for obsolescence.
- Changing the valuation principle without a documented basis.
Frequently asked questions
Must inventory be taken every year?
Yes, the Swedish Tax Agency states that, by law, an inventory must be conducted at least once per year.
Can the inventory be done before the balance sheet date?
Yes, the inventory law permits this under certain conditions if the value can be adjusted in a satisfactory manner up to the balance sheet date.
Is FIFO allowed?
Yes, annual accounting rules permit, among other things, First-In-First-Out for similar assets. LIFO, however, may not be used.
See Inventory & Stock Valuation 2026/2027.
Related content
- Year-end closing for limited companies – step by step 2026
- Control balance sheet – valuation of assets and liabilities
- Templates for finance and accounting
Sources
This guide is general. Always apply the appropriate accounting framework and tax rules for the specific company in question.
