In its 2012 annual report the Unilever Group, which published IFRS-based financial statements, reported the following in the inventory footnote (in million euros).

“During 2012, 131 million euros (2011: 99 million euros) was charged to the income statement for damaged, obsolete, and lost inventories. In 2012, 71 million euros (2011: 43 million euros) was utilised or released to the income statement for inventory provisions taken in earlier years.”
a. Is Unilever a manufacturer or a retailer, and how do you know?
b. Does Unilever use the FIFO or LIFO inventory assumption, and how do you know?
c. What is an inventory write-down and an inventory recovery? Record the entries made by Unilever at the end of 2012 for the write-down and recovery.
d. How would Unilever’s accounting have been different if it used U.S. GAAP instead of IFRS?

  • CreatedAugust 19, 2014
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