Article 2:385 DCC: separate valuation, FIFO, LIFO and own shares
Article 2:385 DCC concerns the technique of valuing: each asset separately, which cost formulas are allowed for inventories, when a fixed value suffices and what may never be on the balance sheet.
The short answer
Article 2:385 DCC requires every asset and liability to be valued separately, allows weighted average prices, FIFO, LIFO or a similar formula for similar inventories and securities, allows a fixed quantity and value for small, constantly replaced stocks, limits goodwill to the expenditure less amortisation and prohibits capitalising own shares. A micro entity applies it too.
Updated 30 October 2026
Key facts
| Place in the law | Section 6 of Title 9 |
| Applies to | Every class, including micro (valuation rule); with tax-based policies the tax rules apply |
| Cost formulas | Weighted average, FIFO, LIFO or similar, for similar inventories and securities (paragraph 2); IFRS does not allow LIFO, Title 9 does |
| Elaboration | RJ 220 and RJk B4 (inventories), RJ 212 and RJk B2 (fixed value), RJ 210 and RJk B1 (goodwill), RJ 240 and RJk B8 (own shares) |
Paragraph 1: every asset and liability separately
1. Assets and liabilities are valued separately insofar as they differ in their significance for the view referred to in article 362 paragraph 1.
What this means. You may not offset a fall in value of one asset against a hidden surplus value of another. If the property in Zwolle has lost € 80.000 in value and the property in Deventer has gained € 120.000, you write down Zwolle; the surplus in Deventer may not absorb that loss. Where items do not differ for the view, such as a thousand identical screws, you may value them as a group; that is what paragraphs 2 and 3 build on.
Paragraph 2: cost formulas for inventories and securities
2. The valuation of similar components of inventories and securities may be carried out by applying weighted average prices, the rules "first in, first out" (FIFO), "last in, first out" (LIFO), or similar rules.
What this means. If you buy the same article at constantly changing prices, you must make an assumption about which units you sold. FIFO assumes the oldest go first, so closing inventory is at the most recent prices. LIFO assumes the newest go first, so closing inventory is at old prices. The weighted average averages everything. RJ 220.313 requires the same formula for inventories that are similar in nature and use; for materially different inventories another formula is allowed. Title 9 allows LIFO; IFRS does not. Switching formula is a change in accounting policy and is allowed only for sound reasons.
Paragraph 3: fixed quantity and value
3. Tangible fixed assets and inventories of raw materials and consumables that are regularly replaced and whose aggregate value is of minor significance may be included at a fixed quantity and value, if the quantity, composition and value are subject to only minor changes.
What this means. A caterer with 2.000 plates, a hotel with bed linen or a construction firm with scaffolding material that is constantly topped up may put that stock at a fixed quantity at a fixed price and book replacements as costs. All four conditions must hold: regular replacement, a total of minor significance, and a quantity, composition and value that fluctuate little. If the stock grows considerably, you adjust the fixed value.
Paragraphs 4 and 5: goodwill and own shares
4. The assets referred to in article 365 paragraph 1 under d and e are recognised at no more than the expenditure incurred for them, less amortisation.
5. Own shares or depositary receipts for them that the legal entity holds or has held on its behalf may not be capitalised. The value attributed to the interest in a subsidiary is, whether or not in proportion to the interest, reduced by the acquisition price of shares in the legal entity and of depositary receipts for them, which the subsidiary holds or has held for its own account; if it acquired these shares or depositary receipts before the time at which it became a subsidiary, however, their carrying amount at that time, or a proportionate part of it, is deducted.
What this means. Paragraph 4 concerns purchased goodwill and prepayments on intangible fixed assets (article 2:365(1) under d and e): these stand at no more than what you paid for them less amortisation. Revaluing to a higher current value is therefore not possible. Paragraph 5: own shares are not an asset. If the BV (private limited company) buys back its own shares, the price is deducted from a reserve and does not go to the assets; see article 2:378. If a subsidiary holds shares in its parent, the parent reduces the value of that subsidiary by their purchase price, or by the carrying amount at the moment the subsidiary became a subsidiary.
Who it applies to, and since when
Article 2:385 is a valuation rule and therefore applies to all classes, including micro (RJk M1.301). What differs per class is the notes: medium-sized, large and small entities explain the chosen cost formula as an accounting policy (art. 2:384(5) DCC); the micro entity need not. If a micro or small entity chooses tax-based policies, inventory valuation follows the tax rules; the annual accounts then align with the tax return. The text of the article is the same in financial years 2025, 2026 and 2027; RJ 220 was amended for financial years from 2026, RJk B4 has been unchanged since 2021. Elaboration: RJ 220 inventories, RJ 212 and RJ 210.
Case: the same inventory under three formulas
Wholesaler Fietsdeel BV (fictional) starts 2026 with 1.000 chain sets at € 10. In March it buys 2.000 more at € 11 and in September 1.500 at € 12. During the year it sells 3.000 sets and has 1.500 left. The total purchase value of what it had is 10.000 + 22.000 + 18.000 = € 50.000.
| Formula (paragraph 2) | Closing inventory 1.500 sets | Cost of sales |
|---|---|---|
| FIFO: the oldest sets were sold | 1.500 × € 12 = € 18.000 | € 32.000 |
| Weighted average: € 50.000 / 4.500 = € 11,11 | 1.500 × € 11,11 = € 16.667 | € 33.333 |
| LIFO (per period): the newest sets were sold | 1.000 × € 10 + 500 × € 11 = € 15.500 | € 34.500 |
In each row, closing inventory and cost of sales add up to € 50.000. With rising prices, FIFO gives the highest profit and LIFO the lowest. Then comes the test of article 2:387: if Fietsdeel can sell the sets at the end of 2026 for only € 12,30 with € 0,80 selling costs, the net realisable value is € 11,50. Under FIFO the inventory stands at € 12 and it must write down 1.500 × € 0,50 = € 750; under the weighted average and LIFO it does not.
In addition, Fietsdeel holds 400 roll containers at € 100 that regularly break and are replaced. It puts them at a fixed value of € 40.000 (paragraph 3) and books the replacement of 35 containers in 2026 as costs.
Mistakes with inventory formulas and own shares
- Offsetting a loss on one asset against a hidden surplus value on another.
- Using different cost formulas for comparable inventories in two branches.
- Switching from FIFO to average in mid-year without treating it as a change in accounting policy.
- Keeping a fixed value for equipment while the stock has grown strongly.
- Putting repurchased own shares on the balance sheet as a financial fixed asset.
Sources
- Art. 2:385 BW: separate valuation, cost formulas, fixed value, goodwill and own shares (wetten.overheid.nl)
- Art. 2:365 BW: intangible fixed assets (wetten.overheid.nl)
- Art. 2:387 BW: impairments (wetten.overheid.nl)
- RJ bundle for medium-sized and large entities (rjnet.nl)
- RJk bundle for micro and small entities (rjnet.nl)
Frequently asked questions
May I use LIFO in the annual accounts of a BV?
Yes. Article 2:385(2) DCC allows weighted average prices, FIFO, LIFO and similar formulas for similar inventories and securities. RJ 220 requires the same formula for inventories of comparable nature and use. Whoever applies IFRS may not use LIFO.
When may I include equipment at a fixed value?
If it concerns tangible fixed assets or raw materials and consumables that are regularly replaced, whose total value is of minor significance and whose quantity, composition and value change little (art. 2:385(3) DCC). You then book replacements as costs.
May a BV capitalise repurchased own shares?
No. Own shares or depositary receipts that the legal entity holds or has held on its behalf may not be capitalised (art. 2:385(5) DCC). You charge the price to a reserve, as a rule the other reserves, and state the repurchase in the statement of changes.
May purchased goodwill be valued at current value?
No. Purchased goodwill and prepayments on intangible fixed assets stand at no more than what was paid for them, less amortisation (art. 2:385(4) DCC).
Read more
Preparing Dutch annual accounts?
Your first set of annual accounts is free, for every size class. Create an account and prepare the annual accounts of your Dutch company under Title 9 of Book 2 of the Dutch Civil Code.
Get started