Major Differences Between Ias/Ifrs and Us Gaap

Furthermore, according to the 2016 Annual Report, Woolworths’ cost of inventories is determined on a weighted average basis. The weighted average method is perceived to assume that items are of similar nature (Carlon et al. 2016). This method would lead to identical goods being allocated to the same price using the weighted average unit cost, which can then be applied to calculate the cost of ending inventory (Carlon et al. 2016). For this particular case, Woolworths Limited, as a commercial entity, regards the cost of inventory to be difficult to measure due to the high turnover rates and accessibility costs of different products.

1. The inventory at your company consists of computer software that the company has developed and is selling. You capitalized (rather than expensed) the cost of duplicating the software, the instruction manuals, and training material that are sold with the software.

Cost of inventory is determined using the average method; inventory is stated at the lower of cost or market. +pB13

inventory using the cost method and did not change the method used during the current

4. What inventory method is used to value inventories? Does this method reflect current cost at year-end?

330-10-30330-10-30-1 The primary basis of accounting for inventories is cost, which has been defined generally as the price paid or consideration given to acquire an asset. As applied to inventories, cost means in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location. It is understood to mean acquisition and production cost, and its determination involves many considerations. 330-10-30330-10-30-2 Although principles for the determination of inventory costs may be easily stated, their application, particularly to such inventory items as work in process and finished goods, is difficult because of the variety of considerations in the allocation of costs and charges.

3. Using the variable costing method, which of the following costs are assigned to inventory?

Section 330-10-35-9 states that the most common method is to apply the lower of cost or market to each individual item of inventory. However, Section 330-10-35-10 states that when there is more than one ending product, the application of the lower of cost or market rule to the total of the items included in such major categories may result in the most useful determination of income. Therefore, since the company has three different types of inventory (live hogs ready for sale, developing animals, and processed pork products) and there are different types of ending products (live animals and processed products suchs as loins, hams, and bacon) the lower of cost or market should be applied to the total of the items included in such major categories, i.e. live hogs ready for sale, developing animals, and processed pork products.

(TCO 4) Inventory valuation methods determine the cost of goods sold and the inventory balance. (1) Explain how the First in First out (FIFO) method is applied (10 points) and (2) provide an example of the impact that this method of inventory valuation will have on Gross Profit. (15 points) (Points : 25)

* Accumulation of costs exceeds the amount expected for acquisition or construction of the asset

2.2 Inventories (AASB 1019) as a general principle, inventories are valued at the lower of cost (including fixed and variable factory overheads where applicable) and net realizable value. Cost is determined on the basis of first-in-first-out, average or standard, whichever is the most appropriate in each case.

b. The inventory write down recorded, as an expense by the company is $4.4 million. It is measured at lower of cost and net realizable value. Cost is measured by weighted average using standard cost method or

How inventory costs are handled is another area in which the IFRS and U.S. GAAP differ. Under U.S. GAAP, a company can either use the last-in, first-out (LIFO) or the first-in, first-out (FIFO) inventory method. Under IFRS, the LIFO method is not allowed to be used. The advantage to having one accounting standard is enhanced comparability between countries. It also removes the need to have to adjust LIFO inventories to FIFO inventories in comparison analysis between companies that use different accounting standards.

To account for inventory, the company uses, first in first out policy. Property plant and equipment are recorded at cost less the accumulated depreciation amount. Depreciation is charged on straight line method