Question

In an annual audit of Solaro Company Limited, you find that a physical inventory count on December 31, 2014, showed merchandise of $441,000. You also discover the following items were excluded from the $441,000.
1. Merchandise of $61,000 is held by Solaro on consignment from BonBon Corporation.
2. Merchandise costing $33,000 was shipped by Solaro FOB destination to XYZ Ltd. on December 31, 2014. This merchandise was accepted by XYZ on January 6, 2015.
3. Merchandise costing $46,000 was shipped FOB shipping point to ABC Company on December 29, 2014. This merchandise was received by ABC on January 10, 2015.
4. Merchandise costing $73,000 was shipped FOB destination from Wholesaler Inc. to Solaro on December 30, 2014. Solaro received the items on January 8, 2015.
5. Merchandise costing $51,000 was shipped by Distributor Ltd. FOB shipping point on December 30, 2014, and received at Solaro's office on January 2, 2015.
6. Solaro had excess inventory and incurred additional $1,500 in storage costs due to delayed shipment in transaction (3) above.
7. Solaro incurred $2,000 for interest expense on inventory it purchased through delayed payment plans in fiscal 2014.
Instructlons
(a) Based on the information provided above, calculate the amount of inventory that should appear on Solaro's December 31, 2014 balance sheet.
(b) Under what circumstances can a private company reporting under ASPE capitalize interest costs incurred to finance inventory?
(c) Under what circumstances can a public company reporting under IFRS capitalize interest costs incurred to finance inventory?


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  • CreatedSeptember 18, 2015
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