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Recognition Differences

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Problems 1,4,7,11,14 Pages 526 - 528.

Two Individual Questions also attached.

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https://brainmass.com/business/leasing/recognition-differences-313679

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1. B

4. C

7. C

11)

a. 1. In accordance with IAS 2, the company reports inventory on the balance sheet at the lower of cost and net realizable value. As a result, inventory will be reported on the December 31, 2009 balance sheet at its net realizable value of $98,000 and a loss on writedown of inventory of $2,000 will be reflected in 2009 net income.

2. Under U.S. GAAP, the company reports inventory on the balance sheet at the lower of cost or market, where market is defined as replacement cost (with net realizable value as a ceiling and net realizable value less a normal profit as a floor). In this case, inventory will be written down to replacement cost and reported on the December 31, 2009 balance sheet at $95,000. A $5,000 loss will be included in 2009 income.

b. As a result of the differing amounts of inventory loss recognized under IFRS and U.S. ...

Solution Summary

The solution answers questions regarding recognition differences.

$2.19