Interim Reporting- Details and IFRS

Question 1

What are the four exceptions as it relates to accounting for inventory in the interim period?

Answer 1

• Gross profit method can be used to estimate interim inventory value
• If a LIFO liquidation will be replenished before year-end, replacement costs is used for cost of goods old, not the liquidation value
• Temporary declines in inventory will not be recognized in the quarter of the decline if you think it’s going to be recovered.
• Planned manufacturing variances will not be reported if you think you’re going to absorb the variance

Question 2

How do you account for accounting principle changes and error corrections?

Answer 2

Retrospective application is used in the interim period in which the change is made. We do not allocate it over the entire year but restate it retrospectively. Example: If there is an error in Q3, you will change retained earnings in Q3 and Q1&Q2 but NOT Q4.

Question 3

How are the financial statement presented in interim reports?

Answer 3

• Income Statement, Statement of Comprehensive income, and SCF:
  Quarter current year and prior year
  Cumulative current year-to-date and prior year
  comparatives
• Three Balance Sheets:
  Quarter for the current year (quarter prior is optional)
  Most recent fiscal year end

Question 4

T/F: IFRS does not mandate interim financial reporting?

Answer 4

True