Financial and Managerial Accounting
15th Edition
ISBN: 9780357297162
Author: Carl S. Warren; Jefferson P. Jones; William B. Tayler, Ph.D., CMA
Publisher: Cengage Learning US
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Chapter C, Problem 7DQ
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Examine the differences between inventory costing methods, under IFRS and GAAP
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Discuss the primary difference between U.S. GAAP and IFRS with respect to determining the cost of inventory.
What method does the company use to value its inventory? What other alternativesare available under IFRS? Under U.S. GAAP?
Discuss the primary differences between U.S. GAAP and IFRS with respect to the lower of cost or net realizable value rule for valuing inventory.
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Financial and Managerial Accounting
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- Identify any differences between U.S. GAAP and IFRS when applying the lower of cost and net realizable value rule to inventory valuation.arrow_forwardWhich U.S. GAAP principle or rule would apply if the net realizable value of acompany’s inventory is below its original cost?a. Lower-of-cost-or-market ruleb. Consistency principlec. Disclosure principled. Historical cost principlearrow_forwardWhich inventory costing method is prohibited under IFRS? a) FIFO b) LIFO c) Weighted average d) Specific identificationarrow_forward
- Explain how the accounting for merchandise purchases and sales is different between accounting under IFRS versus U.S. GAAP.arrow_forwardIFRSarrow_forwardIf circumstances indicate that an inventory write-down is no longer appropriate: a. The write-down can be reversed under U.S. GAAP. b. The write-down can be reversed under IFRS. c. The write-down can be reversed under both U.S. GAAP and IFRS. d. The write-down can’t be reversed under either U.S. GAAP or IFRS.arrow_forward
- What is the purpose of disclosing the difference between the reported LIFO inventory amounts and replacement cost, assuming that replacement cost is equivalent to a FIFO basis?arrow_forwardUnder what circumstances would the gross profit method of estimating inventory be used?arrow_forwardWhat method of inventory valuation should be used for economic decision-making problems?arrow_forward
- Under IFRS, which of the following methods is not acceptable for the valuation of inventory? a. LIFO. b. FIFO. c. Average cost. d. Specific identificationarrow_forwardAF’s inventories are valued at the lower of cost or net realizable value. Does thisapproach differ from U.S. GAAP?arrow_forwardUnder the new revenue recognition standard, how is the sale of inventory recorded?arrow_forward
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