Module 3 Case: Differences in Valuation of US GAAP and IFRS

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US GAAP and IFRS: Differences in Valuation When it comes to valuation, both standards in this case differ significantly in their approach to the same. To begin with, while "U.S. GAAP permits the use of LIFO for inventory valuation, IFRS prohibits its use" (Kieso, Weygandt and Warfield, 2010). According to the authors, IFRS in this case only permit the use of average cost and FIFO. In that regard, inventory must be revalued in instances where entities have utilized LIFO. Next, according to a document prepared by Ernst and Young a firm that offers professional services, the two standards also differ when it comes to revaluation. While U.S. GAAP does not permit revaluation, revaluation as per IFRS "is a permitted accounting policy election for an entire class of assets, requiring revaluation to fair value on a regular basis" (Ernst and Young, 2011). The Difference between an Asset and an Expired Cost (Expense) An expired cost or expense in the words of Berry (1999) "is a cost from which all benefit has been extracted during an accounting period." Examples in this case include but they are not limited to selling and administrative expenses as well as cost of goods sold. An asset on the other hand is an item of value a company can claim ownership to. In the opinion of Berry (1999), the various reserves an entity controls may also be viewed as assets. Assets include but they are not limited to property and equipment, stock as well as cash. Long-term and Current Assets: A

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