Common use of Accounting segregation Clause in Contracts

Accounting segregation. 1. Each Party shall provide that the determination of whether fungible products or materials are originating products shall be made ordinarily by physical segregation of each product or material; or, in case of any difficulty, an inventory management method, such as averaging, last-in, first-out, or first-in, first out, recognised in the GAAP of the Party in which the production is performed, or otherwise accepted by the Party in which the production is performed. 2. The accounting method shall continue to be used for those fungible products or materials throughout the fiscal year of the Party and shall be recorded, applied and maintained in accordance with the GAAP applicable in the Party in which the product is manufactured. The method chosen must: (a) permit a clear distinction to be made between originating and non- originating materials including materials of undetermined origin acquired and/or kept in stock; and (b) guarantee over the relevant accounting period of twelve (12) months that no more products receive originating status than would be the case if the materials had been physically segregated. 3. A producer using an inventory management system shall keep records of the operation of the system that are necessary for the competent authority of the Party concerned to verify compliance with the provisions of this Chapter. 4. The competent authority may require from its exporters that the application of the method for managing stocks as provided for in this Article will be subject to prior authorisation.