Accounting : Basis Of Accounting

2849 Words12 Pages
Crystal Ziemer Professor Valenzuela ACCT 465 CASE 2 A. Basis of Accounting Both require an accrual accounting method and use historical cost basis for their accounting but IFRS allows revaluation to fair value in certain cases which is prohibited in GAAP. There was sufficient information provided to determine that conversion is required. He will have to figure out which accounting principles to use that are in accordance with IFRS. B. Cash and Cash Equivalents Under IFRS bank overdrafts can be included in cash and cash equivalents, this is not permitted under GAAP. Chris would have to find out if the bank overdrafts are ‘’repayable on demand that form an integral part of an entity’s cash management.’’ If they do then they would be under…show more content…
The amount of any reversal of any write-down of inventories, rising from an increase in net realizable value, shall be recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs.’’ Also required for IAS2.36 would be the disclosure of; • carrying amount of any inventories carried at fair value less costs to sell • amount of any write-down of inventories recognized as an expense in the period • amount of any reversal of a write-down to NRV and the circumstances that led to such reversal • carrying amount of inventories pledged as security for liabilities • cost of inventories recognized as expense (cost of goods sold) D. Property, Plant, and Equipment The company is currently using a cost method for property plant and equipment which can be moved over to IFRS without needing any conversion, or they could change to the revaluation model. Since revaluation is allowed under IFRS the company could choose to use this model. However, Chris would need to find this value at the date of revaluation less subsequent depreciation and impairment, provided that fair value can be measured reliably. He would also need to
Open Document