TASK 3: 1. Under IFRS, what inventory accounting method(s)/ cost flow assumption(s) is/are Island Solutions allowed...

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TASK 3: 1. Under IFRS, what inventory accounting method(s)/ cost flow assumption(s) is/are Island Solutions allowed to use and prohibited from using? 6 m 2. The following data is available for the month of September for two items of inventory that might soon be render obsolete for Island Solutions. Inventory balances at September 1, 2023, were as follows: USB-C (TA3) Hub-200 @ $400 ea. USB-C (TB3) Hub - 600 @ $800 ea. Date Sep 5 10 15 20 25 USB-C (TA3) HUB Purchases 500 @ $450 400 @ $475 300 @ $500 Sales 500 @ $540 400 @ $570 Date Sep 10 19 25 28 30 USB-C (TB3) HUB Purchases 600 @ $900 300 @ $950 500 @ $1000 Sales 900 @ $1 080 600 @ $1 140 a. Assume that Island Solutions uses a periodic inventory system under the FIFO method, determine the cost of ending inventory and cost of goods sold at September 30, 2023, for the individual items and in total. (Show all workings) 16.5 m b. Assume that Island Solutions uses a periodic inventory system under the average cost method, determine the cost of ending inventory and cost of goods sold at September 30, 2023, for the individual items and in total. (Round to 2 decimal places) 30 m 3. What is the purpose of the current ratio? Assume that Island Solutions want to compute its current ratio, which inventory method (FIFO or Average Cost) would give a more meaningful current ratio. Explain. 3 m 2 4. Island Solutions has discovered that all of its competitors are using another inventory method and is worried. Can the company change its inventory accounting method, on what grounds? Discuss two (2) trade-offs for the company. 3 m TASK 3: 1. Under IFRS, what inventory accounting method(s)/ cost flow assumption(s) is/are Island Solutions allowed to use and prohibited from using? 6 m 2. The following data is available for the month of September for two items of inventory that might soon be render obsolete for Island Solutions. Inventory balances at September 1, 2023, were as follows: USB-C (TA3) Hub-200 @ $400 ea. USB-C (TB3) Hub - 600 @ $800 ea. Date Sep 5 10 15 20 25 USB-C (TA3) HUB Purchases 500 @ $450 400 @ $475 300 @ $500 Sales 500 @ $540 400 @ $570 Date Sep 10 19 25 28 30 USB-C (TB3) HUB Purchases 600 @ $900 300 @ $950 500 @ $1000 Sales 900 @ $1 080 600 @ $1 140 a. Assume that Island Solutions uses a periodic inventory system under the FIFO method, determine the cost of ending inventory and cost of goods sold at September 30, 2023, for the individual items and in total. (Show all workings) 16.5 m b. Assume that Island Solutions uses a periodic inventory system under the average cost method, determine the cost of ending inventory and cost of goods sold at September 30, 2023, for the individual items and in total. (Round to 2 decimal places) 30 m 3. What is the purpose of the current ratio? Assume that Island Solutions want to compute its current ratio, which inventory method (FIFO or Average Cost) would give a more meaningful current ratio. Explain. 3 m 2 4. Island Solutions has discovered that all of its competitors are using another inventory method and is worried. Can the company change its inventory accounting method, on what grounds? Discuss two (2) trade-offs for the company. 3 m

Answer rating: 100% (QA)

SOLUTION 1 Under IFRS International Financial Reporting Standards Island Solutions is allowed to use the following inventory accounting methods or cost flow assumptions FirstIn FirstOut FIFO This meth... View the full answer