A production process may result in more than one product being produced
simultaneously. This is the case, for example, when joint products are produced or
when there is a main product and a by-product. When the costs of conversion of each
product are not separately identifiable, they are allocated between the products on a
rational and consistent basis. The allocation may be based, for example, on the relative
sales value of each product either at the stage in the production process when the
products become separately identifiable, or at the completion of production. Most byproducts,
by their nature, are immaterial. When this is the case, they are often
measured at net realizable value and this value is deducted from the cost of the main
product. As a result, the carrying amount of the main product is not materially
different from its cost.