Chapter 5, Problem 23QS

Answer each of the following questions related to international accounting standards.
a. Explain how the accounting for items and costs making up merchandise inventory is different between IFRS and U.S. GAAP.
b. Can companies reporting under IFRS apply a cost flow assumptions in assigning costs to inventory? If yes, identify at least two acceptable cost flow assumptions.
c. Both IFRS and U.S. GAAP apply the lower of cost or market method for reporting inventory values. If inventory is written down from applying the lower of cost or market method, explain in general terms how IFRS and U.S. GAAP differ in accounting for any subsequent reversal of that reported decline in inventory value.