Ch 9 Appendix And IFRS Insights Flashcards
2 assumptions made under LIFO Retail?
1 stable prices
2 fluctuating prices
2 benefits of LIFO Retail method
1 tax advantages
2 better matching of costs and revenues
Dollar value LIFO retail method, if price level changes the company must…
Eliminate the price change to measure the real increase
Not the dollar increase
Similarity IFRS and GAAP account of inventory acquisitions…
at Historical cost + evaluate for lower of cost or market
After acquisition
Difference: requirements for accounting for and reporting inventories are more…
Principles based under IFRS
GAAP provides more detailed guidelines for inventory
Accounting
What cost flow assumptions do IFRS and GAAP both permit?
FIFO and Average cost
GAAP and IFRS: LIFO for inventory valuation?
permitted under GAAP
prohibited under IFRS
Similarity: IFRS and GAAP: who owns the goods?
Goods in transit, consigned goods, special sales
agreements, costs to include in inventory accted. The same
Which cost flow assumption do IFRS and GAAP set their own standards for?
Specific identification
Difference IFRS and GAAP: lower-of-cost-or-market test for inventory valuation
IFRS defines market as net realizable value
GAAP defines market as replacement cost subject to
constraints of net realizable value (ceiling)
And net realizable value - normal markup (floor)
Difference IFRS and GAAP: how inventory is written down under the lower-of-cost-or-market valuation
GAAP new basis is its cost, inventory can’t be written
Back up to original value
IFRS write downs can be reversed
Difference GAAP and IFRS: biological assets and agricultural produce?
IFRS: reported at net realizable value at point of harvest
GAAP: no requirement for accounting for all biological
Assets in same way
Net realizable value
Net amount company expects to realize from sale
Of inventory
