The audit working papers include the following (in $000's): Category Snowmobiles (stock and customized) Winter parts...

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The audit working papers include the following (in $000's): Category Snowmobiles (stock and customized) Winter parts and accessories Subtotal Jet skis Motorboats Canoes and kayaks Summer parts and accessories Subtotal Total Days' sales in inventory Cost $1,752 774 2,526 840 956 526 252 2,574 Summary of Writedowns June 10, 2021 Net Realizable Value 60 days $ 1,730 900 2,630 772 932 650 202 2.556 $ 5,100 $5,186 Write- down $ 22 22 68 24 1 50 142 $164 $ Cost August 31, 2020 Net Realizable Value 898 458 1,356 998 1,078 560 404 3,040 $4,396 63 days $ 808 530 1.338 948 1,062 690 360 3,060 $ 4,398 Write- down $ 90 90 50 16 1 44 110 $ 200 FS applied the lower of cost and net realizable value, in accordance with its accounting policy. I do not agree with the method used. IFRS requires representational faithfulness, and using net realizable value less normal profit margin is more representative of cost and would ensure historic profit margins are maintained. A further writedown of the inventory and a reduction in purchase price are necessary. The relevant accounting issues: Discuss the relevant IFRS recognition and measurement requirements for the specific accounting issues noted in the case, applying the related case facts Consider the users' motivations and potential biases Conclude on the appropriate accounting treatment based on your analysis ● ● The audit working papers include the following (in $000's): Category Snowmobiles (stock and customized) Winter parts and accessories Subtotal Jet skis Motorboats Canoes and kayaks Summer parts and accessories Subtotal Total Days' sales in inventory Cost $1,752 774 2,526 840 956 526 252 2,574 Summary of Writedowns June 10, 2021 Net Realizable Value 60 days $ 1,730 900 2,630 772 932 650 202 2.556 $ 5,100 $5,186 Write- down $ 22 22 68 24 1 50 142 $164 $ Cost August 31, 2020 Net Realizable Value 898 458 1,356 998 1,078 560 404 3,040 $4,396 63 days $ 808 530 1.338 948 1,062 690 360 3,060 $ 4,398 Write- down $ 90 90 50 16 1 44 110 $ 200 FS applied the lower of cost and net realizable value, in accordance with its accounting policy. I do not agree with the method used. IFRS requires representational faithfulness, and using net realizable value less normal profit margin is more representative of cost and would ensure historic profit margins are maintained. A further writedown of the inventory and a reduction in purchase price are necessary. The relevant accounting issues: Discuss the relevant IFRS recognition and measurement requirements for the specific accounting issues noted in the case, applying the related case facts Consider the users' motivations and potential biases Conclude on the appropriate accounting treatment based on your analysis ● ●

Answer rating: 100% (QA)

i IFRS Recognition and Measurement Requirements Lower of Cost and Net Realizable Value NRV IFRS requires entities to assess the carrying amount of inventories and write them down to the lower cost and ... View the full answer