Inventories

12 Months Ended

Dec. 31, 2011

Note 4. Inventories

Inventories are stated at the lower of cost or market. In the United States, we manufacture certain finished products and parts inventories for drill bits, completion products, bulk materials, and other tools that are recorded using the last-in, first-out method, which totaled $160 million at December 31, 2011 and $108 million at December 31, 2010. If the average cost method had been used, total inventories would have been $36 million higher than reported at December 31, 2011 and $34 million higher than reported at December 31, 2010. The cost of the remaining inventory was recorded on the average cost method. Inventories consisted of the following:

	December 31
Millions of dollars	2011		2010
Finished products and parts	$	1,801	$	1,369
Raw materials and supplies		673		496
Work in process		96		75
Total	$	2,570	$	1,940

Finished products and parts are reported net of obsolescence reserves of $108 million at December 31, 2011 and $88 million at December 31, 2010.

- Definition

The entire disclosure for inventory. This may include, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the major classes of inventory, and the nature of the cost elements included in inventory. If inventory is stated above cost, accrued net losses on firm purchase commitments for inventory and losses resulting from valuing inventory at the lower-of-cost-or-market may also be included. For LIFO inventory, may disclose the amount and basis for determining the excess of replacement or current cost over stated LIFO value and the effects of a LIFO quantities liquidation that impacts net income.

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