Overview
Question 1:
Write five important difference between US GAAP and IFRS, and explain in your opinion which one is the most import one.
Question 2:
What inventory method is not allowed under IFRS?
Question 3:
What is the most common earnings management (manipulation of financial statement) among public corporations in the United States and the reasons (incentives) for it?
Question 4:
Fair Co. adopted the U.S. GAAP dollar-value LIFO inventory method as of January 1, Year 1. A single inventory pool and an internally computed price index are used to compute Bach's LIFO inventory layers. Information about Fair's dollar value inventory follows:
Inventory
At base At current
Date year cost year cost
1/1/Year 1 $90,000 $90,000
Year 1 layer 30,000 45,000
Year 2 layer 55,000 80,000
What was the price index used to compute Bach's Year 2 dollar-value LIFO inventory layer?
Question 5:
Right Company had January 1 inventory of $220,000 when it adopted dollar-value LIFO. During the year, purchases were $1,350,000 and sales were $2,120,000. December 31 inventory at year-end prices was $302,400, and the price index was 112.
1. What is Right Company’s ending inventory?
2. What is Right Company’s gross profit?