Case 2(7 Marks):

Siemens AG: Identifying differences and similarities between IFRS and GAAP

Presented below are excerpts from the 2018 annual report of Siemens AG, a German company that operates in numerous industries, including technology, power generation, and medical diagnostics.

NOTE 1 Basis of presentation

InventoriesInventories are valued at the lower of acquisition or production costs and net realizable value, costs being generally determined on the basis of an average or first-in, first-out method.

NOTE 11 Inventories

Cost of sales includes inventories recognized as expense amounting to 57,029 million and 57,176 million, respectively, in fiscal 2018 and 2017. Compared to prior year, write-downs increased (decreased) by (19) million and 15 million as of September 30, 2018 and 2017.

Source: Siemens AG 2018 annual report.

Required:

Using the Siemens AG note as an example, identify the similarities and differences between U.S. GAAP and IFRS regarding inventory financial accounting and reporting.

Please help me answer this question referencing the example by using the figures. Thank you in advance!

NOTE 11 Inventories (in millions of ) Raw materials and supplies Work in progress Finished goods and products held for resale Advances to suppliers 2018 3,165 6,085 3,871 763 13,885 Sep 30, 2017 2,955 6,169 3,972 790 13,885