Will IFRS and GAAP Convergence (or Adoption) work for investors? What a Switch from GAAP to IFRS May Mean for Investors Read more: http://www.foxbusiness.com/personal-finance/2011/11/28/what-switch-from-gaap-to-ifrs-may-mean-for-investors/#ixzz1t7Fuj1U9 The convergence between IFRS and GAAP has been a hot topic in the world of accounting. From defining the difference between adoption and convergence, when should the US adopt to IFRS, how should the US do it, what’s the impact for public company
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The book tells us how a manager continually fights to meet the required output of his manufacturing plant as well as his marital life & family. If we talk about the manager, Mr. Rogo, initially he did not have a clear understanding of ways to control and manage plant operations to be more efficient and to produce products on schedule. Due to that the plant was going through a tough time with revenues falling and getting cut by competition. Revenue was falling for last three quarters and Japanese
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first-out (LIFO) method consist of four different components. The first advantage of LIFO is recent cost against current revenues. This is advantage because the inventory cost will matched the physical cost of the replacement inventory without inflation to drive up the cost. The LIFO reduced the inventory profits by matching the recent costs against revenues. This will help in eliminating cost of goods sold to be understated and profit to be overstated. The second advantage of LIFO is tax benefits
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210.4–05); (4) raw materials; and (5) supplies. o If the method of calculating a LIFO inventory does not allow for the practical determination of amounts assigned to major classes of inventory, the amounts of those classes may be stated under cost flow assumptions other that LIFO with the excess of such total amount over the aggregate LIFO amount shown as a deduction to arrive at the amount of the LIFO inventory. o (b) The basis of determining the amounts shall be stated. o If cost is
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d. the FIFO method is used, but not when the weighted average method is used. e. the weighted average method is used, but not when the FIFO method is used. 5. Weighted average and FIFO equivalent units would be the same in a period when: a. no beginning inventory exists. b. no ending inventory exists. c. both a beginning and an ending inventory exist but are not necessarily equal. d. the beginning inventory units equal the ending inventory units. e. Weighted average and FIFO equivalent
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FIFO stands for first-in, first-out which means that the oldest items in the inventory are recorded as being sold first. At the end of the year the items left in inventory are the ones that were most recently placed there. FIFO Advantages The FIFO method is simple to understand as well as to operate. The method makes sense because the products that are made or received first are the first ones to be utilized or sold. FIFO helps to reduce old or outdated inventory by using it first before the
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2002. Its address is 3701 Commerce Drive, Baltimore, MD 23239. Its employer identification number is 69-7414447. It elects to file its initial tax return for 2002 as a calendar-year corporation and uses the accrual method of accounting. It elects the LIFO method of inventory valuation. Jason Sprull (SSN 333-33-3333) and Martin Winsock (SSN 555-55-5555) formed the business. They each contributed $250,000 cash for 50 percent of the 100,000 shares of $1 par value stock issued and outstanding. The
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The choice of inventory accounting methods, specifically for the case of FIFO and LIFO, has developed into a decision, which includes varying consequences and comes with specific implications and benefits, such as communicating private information with FIFO (Hughes, and Schwartz, 1988, p.42) or tax benefits for the choice of LIFO (Morse and Richardson, 1983, p.125). Every firm and manager has to face the decision of which accounting method to choose, and has to include several aspects into their
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. . . . . . . . . . . . . . . . Cost Flow Assumption FIFO Financial Statements Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cost of Goods Sold . . . . . . . . . . . . . . . . . . . . . . . . . Gross Margin on Sales . . . . . . . . . . . . . . . . . . . . . . . Ending Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . aTV $250 290 300 $840 $550 Weighted Average (2) $550 280b $270 $560e LIFO (3) $550 300c $250 $540f (1) $550 250a $300 $590d
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Understanding the Inventory Equation • LIFO and FIFO cost-flow assumptions • LIFO tax conformity rule • Inventory accounting: IFRS vs. GAAP • Disclosures regarding cost flow assumptions 8 Two Main Issues Inventory accounting has two fundamental components: 1) Product Costing Decision: What costs are included in each product's inventory account? (Product costing is discussed in depth in managerial accounting). 2) Cost Flow Decision (LIFO/FIFO): Once costs are in the inventory
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