Question

Samsung Electronics reports the following regarding its accounting for inventories.
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the average cost method, except for materials-in-transit. Inventories are reduced for the estimated losses arising from excess, obsolescence, and the decline in value. This reduction is determined by estimating market value based on future customer demand. The losses on inventory obsolescence are recorded as a part of cost of sales.
1. What cost flow assumption(s) does Samsung apply in assigning costs to its inventories?
2. If at year-end 2013 there was an increase in the value of its inventories such that there was a reversal of W550 (W is Korean won) million for the 2012 write-down, how would Samsung account for this under IFRS? Would Samsung’s accounting be different for this reversal if it reported under U.S. GAAP? Explain.


$1.99
Sales0
Views59
Comments0
  • CreatedApril 23, 2015
  • Files Included
Post your question
5000