Asked by Chris Gladden on Jul 29, 2024
Verified
Inventory accounting under IFRS differs from GAAP in regard to
A) neither the use of LIFO nor lower-of-cost-or-market.
B) the use of LIFO but not lower-of-cost-or-market.
C) the use of lower-of-cost-or-market but not LIFO.
D) the use of LIFO and lower-of-cost-or-market.
LIFO
Last In, First Out, a stock valuation approach that accounts for the most newly manufactured goods as being sold before all others.
Lower-Of-Cost-Or-Market
A rule in accounting that dictates inventory should be recorded at whichever is less between its original purchase cost and its present market value.
- Familiarize oneself with the outcomes of implementing LIFO and FIFO cost flow assumptions according to the stipulations of GAAP and IFRS.
- Outline the concepts underpinning lower-of-cost-or-market and net realizable value, focusing on their role in inventory valuation.
Verified Answer
BA
Bramwel AlbertJul 30, 2024
Final Answer :
D
Explanation :
Under IFRS, LIFO (Last In, First Out) is not permitted for inventory accounting, whereas it is allowed under US GAAP. Additionally, IFRS uses a lower-of-cost-or-net realizable value approach, whereas GAAP uses a lower-of-cost-or-market approach.
Learning Objectives
- Familiarize oneself with the outcomes of implementing LIFO and FIFO cost flow assumptions according to the stipulations of GAAP and IFRS.
- Outline the concepts underpinning lower-of-cost-or-market and net realizable value, focusing on their role in inventory valuation.