Ch 9 Appendix And IFRS Insights Flashcards Preview

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Flashcards in Ch 9 Appendix And IFRS Insights Deck (13):

2 benefits of LIFO Retail method

1 tax advantages

2 better matching of costs and revenues


2 assumptions made under LIFO Retail?

1 stable prices

2 fluctuating prices


Dollar value LIFO retail method, if price level changes the company must...

Eliminate the price change to measure the real increase
Not the dollar increase


Similarity IFRS and GAAP account of inventory acquisitions...

at Historical cost + evaluate for lower of cost or market
After acquisition


Difference: requirements for accounting for and reporting inventories are more...

Principles based under IFRS

GAAP provides more detailed guidelines for inventory


What cost flow assumptions do IFRS and GAAP both permit?

FIFO and Average cost


GAAP and IFRS: LIFO for inventory valuation?

permitted under GAAP

prohibited under IFRS


Similarity: IFRS and GAAP: who owns the goods?

Goods in transit, consigned goods, special sales
agreements, costs to include in inventory accted. The same


Which cost flow assumption do IFRS and GAAP set their own standards for?

Specific identification


Difference IFRS and GAAP: lower-of-cost-or-market test for inventory valuation

IFRS defines market as net realizable value

GAAP defines market as replacement cost subject to
constraints of net realizable value (ceiling)
And net realizable value - normal markup (floor)


Difference IFRS and GAAP: how inventory is written down under the lower-of-cost-or-market valuation

GAAP new basis is its cost, inventory can't be written
Back up to original value

IFRS write downs can be reversed


Difference GAAP and IFRS: biological assets and agricultural produce?

IFRS: reported at net realizable value at point of harvest

GAAP: no requirement for accounting for all biological
Assets in same way


Net realizable value

Net amount company expects to realize from sale
Of inventory