Lisali Company gathered the following information related to inventory that it owned on December 31, 2011: Historical
Question:
Historical cost ......... $100,000
Replacement cost ....... 95,000
Net realizable value ...... 98,000
Normal profit margin ...... 20%
a. Determine the amount at which Lisali should carry inventory on the December 31, 2011, balance sheet and the amount, if any, that should be reported in net income related to this inventory using (1) U.S. GAAP and (2) IFRS.
b. Determine the adjustments that Lisali would make in 2011 to reconcile net income and stockholders’ equity under U.S. GAAP to IFRS.
GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Step by Step Answer:
a 1 Under US GAAP the company reports inventory on the balance sheet at the lower of cost or market ...View the full answer
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Related Book For 
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
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