Asked by ALEXANDER STEPHAN MACHHOLZ on May 12, 2024
Verified
The only acceptable cost flow assumptions under IFRS are
A) FIFO and LIFO.
B) FIFO and average.
C) LIFO and average.
D) FIFO LIFO and average.
LIFO
Last In, First Out, a method of inventory accounting where items produced last are considered the first to be sold.
FIFO
FIFO, or First-In, First-Out, is an inventory valuation method where goods first added to inventory are the first to be sold.
- Gain understanding of the ramifications of adopting LIFO and FIFO cost flow assumptions under the frameworks of GAAP and IFRS.
Verified Answer
JV
Jennifer VensonMay 14, 2024
Final Answer :
B
Explanation :
Under IFRS, the only acceptable cost flow assumptions are FIFO, weighted average, and specific identification. LIFO is not allowed under IFRS. However, since the question only provides options with one of the allowed cost flow assumptions, the best choice is option B, which includes two of the allowed cost flow assumptions: FIFO and average. The correct answer is B.
Learning Objectives
- Gain understanding of the ramifications of adopting LIFO and FIFO cost flow assumptions under the frameworks of GAAP and IFRS.
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