Both IFRS and U.S. GAAP apply the lower of cost or market method for reporting inventory values. If inventory is written down from applying the lower of cost or market method, explain in general terms how IFRS and U.S. GAAP differ in accounting for any subsequent period reversal of that reported decline in inventory value.

Q: reason for the FASB changing the accounting method for reporting lower-of-cost-or-market

A: FASB introduced an update in inventory measurement in July 2015. As per this, the inventory should…

Q: which of the following will not be deducted to compute the consolidated cost of goods sold? A.…

A: Consolidated financial statements means financial statements of overall group where company have one…

Q: Which of the following statements about the use of the FIFO assumption is NOT true?   a.   The…

A: Solution: "The FIFO assumption produces inventory asset values that are based on older purchase…

Q: Where there is a reversal of a previous inventory write-down, the entry would involve a _______to…

A: Inventory is the combination of all the goods which are ready for sale, goods which are in process,…

Q: IFRS and GAAP are similar for all of the following inventory accounting standards except IFRS…

A: IFRS allows the inclusion of overhead in inventory. In IFRS the use of LIFO cost flow assumption is…

Q: Which of the following statements about the LIFO Reserve Disclosure is NOT true?  a. Usually, FIFO…

A: The credit balance in the LIFO reserve reports the difference since the time that LIFO was adopted.…

Q: When comparing a US company that uses the last in, fi rst out (LIFO) method of inventory with…

A: There are two standards that guide for preparation of Financial Statements one is as per US GAAP and…

Q: Required: Adjusting entry

A:

Q: Under the perpetual inventory system, increases and decreases in inventory are recorded through the…

A: Solution: Under perpetual inventory system, inventory records are updated with every purchase and…

Q: A retail method of inventory estimation that considers net mark-up but excludes net markdown in…

A: For inventory valuation in the case of retail inventory, the various methods are used such as :…

Q: Carrying inventory at a value above its historical cost would most likely be permitted if:A. the…

A: IFRS (International Financial Reporting Standard)allow the inventories of manufacturers and…

Q: At the end of a reporting period, a company will value its inventory under one or two methods: The…

A: Inventory:  Inventory is the raw materials or goods that are held by the business for using in…

Q: This inventory costing method requires recalculation of the average cost of all items in stock after…

A: Inventory valuation is basically based on the flow of inventory. It is up to the company which…

Q: Carey Company adheres to U.S. GAAP, whereas Jonathan Company adheres to IFRS. Itis least likely…

A: Option B is correct.

Q: If beginning inventory is understated by $980O, the effect of this error in the current period is…

A: The COGS is determined based on beginning inventory, inventory purchase, and closing inventory. COGS…

Q: Margo Company uses the periodic inventory method and had the following inventory information…

A: Inventory valuation is the process of determining the cost of inventory at the end of the reporting…

Q: If a group of inventory items costing $15,000 had been omitted from the year-end inventory count,…

A: The errors in inventory causes overstatement or understatement of inventory. When the ending…

Q: Which of the following is true about the issues of the gross profit method of estimating inventory?…

A: The gross profit method is a method for estimating the value of ending inventory and cost of…

Q: Under which method of inventory valuation, the average price used for valuation of goods issued is…

A: Inventory is the material in which the business deal. It is a very important component of company…

Q: Vaughn Co. decides at the beginning of 2020 to adopt the FIFO method of inventory valuation. Vaughn…

A: a. VAUGHN CO. Income Statement For the Year Ended December 31 LIFO   2018 2019 2020…

Q: Do you agree with the following statements? Express your opinion on each statement.

A: 1: This statement is correct  This can be explained with the help of example: Suppose closing stock…

Q: Which statement is not true about the gross profit method of inventory valuation? None of these It…

A: Inventory is one of the important current asset of the business. Valuation and management of…

Q: Reversals of inventory write-downs may exceed the amount of the original write-down previously…

A: Inventory:- Inventories are shown in asset side of balance sheet as a current asset. It shows the…

Q: Discuss how a change to the LIFO method of inventory valuation is handled when it is impracticable…

A:

Q: When using the periodic inventory system, which of the following generally would not be separately…

A: Periodic inventory system: The method or system of recording the transactions related to inventory…

Q: Which one of the following statements is not true? a. A company using the periodic system does not…

A: At the end of the period, there is still a need to match the inventory value with the physical…

Q: When a company changes its inventory method to LIFO, an exception is made for the way accounting…

A: Explain the difference in the accounting treatment of a change to the LIFO inventory method from…

Q: 2. Gabriela Company’s auditor discovered that the company inadvertently overstated ending Inventory…

A: Inventory means the goods in which the business deals. Inventory should be valued correctly  as it…

Q: An overstatement of ending inventory results in: Select one: a. an understatement of COGS and an…

A: option a is the correct answer.

Q: Under IFRS, which of the following methods is not acceptable for the valuation of inventory? a.…

A:

Q: Which of the following statements is not true concerning interim financial reporting and…

A: Companies that use the LIFO method may encounter a liquidation of base period inventories at an…

Q: following is accounted for prospectively? Change in reporting entity. Change in…

A: A change in an estimate is accounted for prospectively.

Q: The following information for Tuell Company is available:                              1. Assume…

A: Inventory refers to all of the items, goods, commerce, and materials held by a company for the…

Q: Rustic Company has recognized an impairment loss on the value of inventory. If the inventory's value…

A: there is difference in the requirement of and recording of inventory as per ifrs and US GAAP . gaap…

Q: Describe the accounting treatment for a change in inventory method other than to LIFO.

A: Method of Inventory: Inventory refers to the current assets that a company expects to sell during…

Q: Under the perpetual inventory method, what account is credited when adjusting for the estimated cost…

A: Perpetual inventory system is the system of maintaining the inventory records perpetually throughout…

Q: When using the periodic LIFO inventory cost method, which of the following statements is true? a.The…

A: As per the LIFO method, goods purchased last or most recent purchases would be sold first.   Which…

Q: Discuss the primary differences between U.S. GAAP and IFRS with respect to the lower of cost or net…

A:

Q: A method of inventory valuation wherein each particular item in the ending inventory is valued on…

A: Moving average inventory Method: Under this method, inventory is valued based on the average cost of…

Q: According to the GAM for NGAs, this shall be used for large numbers of items of inventory that are…

A: Inventory Management System- Inventory management system could include software system or some kind…

Q: Allowance Method in accounting for inventory write-down

A: Statement I is correct because Allowance method is required to be followed in accounting for…

Q: If ending inventory is overstated in the current fiscal year, what effect will this have on net…

A: The question is multiple choice question and related with overstated ending inventory. The ending…

Q: If ending inventory in Period 1 is​ overstated, gross profit in Period 2​ is

A: The correct answer is Understated.

Q: nventory cost flow assumptions address accounting issues except when a.identical units of…

A: Inventory represents the product which is used in the production process of the company at different…

Q: State how each of the following items is reflected in thefinancial statements.(a) Change from FIFO…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Petco Inc. uses the periodic inventory system. Assess the effect on net income of including goods in…

A: Not including the fob shipping purchases in the ending inventory will understate the ending…

Q: Explain why errors in the valuation of inventory at the endof the year are sometimes called…

A: The errors in the valuation of ending inventory result in underestimate or overestimate the ending…

Q: Which of the following statements about the use of the FIFO assumption is NOT true? a.The FIFO…

A: In FIFO method  the opening  and earliest goods will be sold first.

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.