Chapter 6, Problem 23QS

International accounting standards

C2

P2

Answer each of the following questions related to international accounting standards.

a. Explain how the accounting for items and costs making up merchandise inventory is different between IFRS and U.S. GAAP.

b. Can companies reporting under I FRS apply a cost flow assumption in assigning costs to inventory? If yes, identify at least two acceptable cost flow assumptions.

c. Both iFRS and U.S. GAAP apply the lower of costar 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. GÀAP differ in accounting for any subsequent period reversal of that reported decline in inventory value.