IFRS Activity 3 Under U.S. GAAP, LIFO is an acceptable inventory method. Financial statement information for three companies that use LIFO follows. All table numbers are in millions of dollars. *Autos and trucks only Assume that these companies adopted IFRS and thus were required to use FIFO rather than LIFO. a. Prepare a table with the following columns: (1) Difference between FIFO and LIFO inventory valuation (2) Revised IFRS net income using FIFO (3) Difference between FIFO and LIFO inventory valuation as a percent of total current assets (rounded to the nearest whole percent) (4) Revised IFRS net income as a percent of the reported net income (rounded to the nearest whole percent) b. Complete the table for the three companies. c. For which company would a change to IFRS for inventory valuation have the largest percentage impact on total current assets (Col. 3)? d. For which company would a change to IFRS for inventory valuation have the largest percentage impact on net income (Col. 4)? e. Why might Kroger have a negative impact on net income from using LIFO, while the other two companies have a positive impact on net income from using LIFO?

BuyFind

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
BuyFind

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

Solutions

Chapter
Section
Chapter MJ, Problem 3IFRS
Textbook Problem

IFRS Activity 3

Under U.S. GAAP, LIFO is an acceptable inventory method. Financial statement information for three companies that use LIFO follows. All table numbers are in millions of dollars.

Chapter MJ, Problem 3IFRS, IFRS Activity 3 Under U.S. GAAP, LIFO is an acceptable inventory method. Financial statement , example  1

*Autos and trucks only

Assume that these companies adopted IFRS and thus were required to use FIFO rather than LIFO.

  1. a. Prepare a table with the following columns:

Chapter MJ, Problem 3IFRS, IFRS Activity 3 Under U.S. GAAP, LIFO is an acceptable inventory method. Financial statement , example  2

  1. (1) Difference between FIFO and LIFO inventory valuation
  2. (2) Revised IFRS net income using FIFO
  3. (3) Difference between FIFO and LIFO inventory valuation as a percent of total current assets (rounded to the nearest whole percent)
  4. (4) Revised IFRS net income as a percent of the reported net income (rounded to the nearest whole percent)
  5. b. Complete the table for the three companies.
  6. c. For which company would a change to IFRS for inventory valuation have the largest percentage impact on total current assets (Col. 3)?
  7. d. For which company would a change to IFRS for inventory valuation have the largest percentage impact on net income (Col. 4)?
  8. e. Why might Kroger have a negative impact on net income from using LIFO, while the other two companies have a positive impact on net income from using LIFO?

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