How does the application of the lower-of-cost-or-market rule differ between U.S. GAAP and IFRS?
Both U.S. GAAP and IFRS require use of the lower-of-cost-or-market rule to value inventories.
However, the two sets of standards differ in two respects. First, U.S. GAAP defines market value as replacement cost, subject to a maximum and minimum amount. In contrast, IFRS uses net realizable value as the measure of the market value of inventory, and no upper or lower limits are imposed.
Second, under U.S. GAAP, if inventory is written down to a new, lower market value, this amount becomes the basis for that inventory. Future write-downs of the inventory use this new amount to compare with market value. However, under IFRS, write-downs of inventory can be reversed in later periods. That is, a gain is recognized when the value of the inventory goes back up.
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Back Company sold merchandise on credit. Its gross profit ratio is 23%. The effect of this transaction is that the
a. earnings per share decreased b. current ratio was unchanged c. debt-to-equity ratio increased d. earnings per share increased
Marketers are increasingly using online surveys to collect primary data. One advantage is that
A. consumers value e-mail surveys and feel highly regarded when receiving them. B. consumers want to be helpful so they complete the survey multiple times. C. response rates are higher because consumers are anonymous. D. turnaround time from data collection to report is much quicker than with traditional methods. E. the quality of responses is better with online surveys than they are with personal interview surveys.
Answer the following statements true (T) or false (F)
The income statement for Eideldown, Inc. is divided by its two product lines, blankets and pillows, as follows:
If total fixed costs remain unchanged and Eideldown, Inc. drops the pillows line, operating income will decrease by $270,000.
The ____ is where a transaction can first be found on the accounting records
A) chart of accounts B) income statement C) balance sheet D) journal