Lower of cost or market for inventory. Ericsson, a Swedish

Lower of cost or market for inventory. Ericsson, a Swedish networks and communications firm, reported a gross value of inventory of SEK25,227 on December 31, 2007. It also reported an ending balance in the allowance for impairments of SEK2,752 million. During 2007, Ericsson recognized a write-down of inventory in the amount of SEK1,276 million. Assume the acquisition cost of the inventory written down is SEK3,500 million. Ericsson applies IFRS and reports its results in millions of Swedish kronor (SEK).

a. What was the carrying value of Ericsson’s inventory as of December 31, 2007?

b. What journal entry did Ericsson make in 2007 to record the write-down (impairment) of inventory?

c. Suppose that in January 2008, the market value of the impaired inventory increased to SEK2,800. What journal entry, if any, would Ericsson make?

d. How, if at all, would your answers to parts a-c differ if Ericsson applied U.S. GAAP?


Members

  • Access to 1 Million+ Textbook solutions
  • Ask any question from 24/7 available
    Tutors
$9.99
VIEW SOLUTION
OR

Non-Members

Get help from Accounting Tutors
Ask questions directly from Qualified Online Accounting Tutors .
Best for online homework instance.