Question: Carlton Inc and Dennis Ltd are two North American manufacturers

Carlton Inc. and Dennis Ltd. are two North American manufacturers of auto parts. The two firms use different inventory cost flow accounting policies. This question asks you to determine some of the differences due to the reporting. The two firms report the following selected information for 20X1:

1. Are prices rising or falling in the 20X1 supplier markets in which Dennis (and Carlton) buys? How do you know?
2. Compare Dennis’s and Carlton’s inventory levels and comment on the comparison.
3. Is it desirable to have similar companies using different inventory cost flow policies? If not, why do accounting standard setters not requireuniformity?
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  • CreatedFebruary 17, 2015
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