Lower Of Cost Or Market Inventory Valuation: IFRS Versus US GAAP

Gray, Dahli; Ehoff, Clemense

doi:10.19030/jber.v12i1.8372

Cited by 3 publications

(9 citation statements)

References 2 publications

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“…From the aforementioned company illustration, the journal entry with respect to this contrary stand of GAAP for the first item will be as follows. Furthermore, the existence of differences in the valuation is evidence in literature with studies asserting the different methods to measure inventory under GAAP (Needles and Powers, 2012;Gray and Ehoff, 2014;PWC, 2015;Kieso, 2016). According to Kieso (2016), inventory cost purchase value can be determined using the historical cost-based approach such as first-in-first-out, Last-in-First-out and weighted average.…”

Section: Incorrect Way Of Applying the Lc Or Nrv Inventory Itemmentioning

confidence: 99%

The Enactment and Critique of International Accounting Standard Two

Epizitone

Nxumalo

2021

Acad. J. Interdiscip. Stud.

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Harmonising the International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) globally has been the objective of national boards that seek to eliminate existing differences. The harmonisation project has been substantially efficient in realising the IFRS in emerging economies. However, concerning the international accounting standard two, the existence of different inventory valuation methods in literature is one of the dilemmas confronting the application of IAS 2 in many nations globally. This study through a comprehensive literature review discusses and present a critique on the international accounting standard two to afford insight that will be beneficial to both scholar and standard setters. The findings reveal a formidable contribution of the current asset inventory on companies and compliance levels in South Africa. Furthermore, these findings supplement prevailing body knowledge on IAS two and the value relevance of accounting inventories. Highlighting key critiques on the IAS 2 prescriptions and application internationally and also revealing the standards own crucial flaws and strengths and on companies. Received: 6 May 2021 / Accepted: 23 August 2021 / Published: 5 November 2021

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Section: Incorrect Way Of Applying the Lc Or Nrv Inventory Itemmentioning

confidence: 99%

The Enactment and Critique of International Accounting Standard Two

Epizitone

Nxumalo

2021

Acad. J. Interdiscip. Stud.

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“…First, LIFO is still allowed by US-GAAP (Street & Gray, 1999;Bao et al, 2010), while it is prohibited by IFRS (Reneiking et al, 2012). Although, in this case, the SEC (Securities and Exchange Commission) and IRC (Internal Revenue Code) imposed some limitations, respectively: "the LIFO reserve" and "the conformity rule" (Husband, 1940;Cushing & LeClere, 1992;Gray & Ehoff, 2014).…”

Section: Inventories Under Ifrs and Us Gaap: Main Differencesmentioning

confidence: 99%

“…Table 1. Key differences between US GAAP and IFRS Standards in accounting for inventories Source: Bao et al, (2010), Gray & Ehoff (2014), Penner et al (2016), Deloitte (2019), PwC (2019a).…”

Section: Inventories Under Ifrs and Us Gaap: Main Differencesmentioning

confidence: 99%

“…For ordinarily interchangeable items, it could be difficult for the entity to determine the specific cost because of (a) high inventory turnover rate and (b) large numbers of the items. For overcoming the issue, it may be used cost-flow assumptions (Biddle, 1980;Gray & Ehoff, 2014), such as LIFO, FIFO, or WAC. These formulas may or may not reflect the actual physical flow of the inventory (Flood, 2019).…”

Section: Inventories Accounting Treatments: Primary Measurement and Cost Formulasmentioning

confidence: 99%

“…Consistent with several authors (Husband, 1940;Jennings, Simko & Thompson II, 1986;Dopuch & Pincus, 1988;Cushing & LeClere, 1992), the most explanatory reason for the LIFO choice lies in its tax benefits. Indeed, Gray and Ehoff (2014) defined LIFO as "a taxing matter." When an entity elects LIFO, its ending inventories are underestimated, the cost of goods sold is overestimated.…”

Section: Inventories Accounting Treatments: Primary Measurement and Cost Formulasmentioning

confidence: 99%

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Inventories Accounting under US-GAAP and IFRS Standards: The Differences That Hinder the Full Convergence

Lucchese¹,

Carlo²

2020

IJBM

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This study purposes of understanding the existing differences between US-GAAP and IFRS accounting treatments of inventory. Given the 2015 FASB update, aimed at simplifying and aligning inventory accounting with IFRS standards, the research explores the introduced innovations. More specifically, the study, starting from a literature review and standards analysis, designs a theoretical framework aimed at facilitating the understanding of the differences still existing between the two accounting principles. Different from the prior works, we focus on the complex determination of the net realizable value in the case of input (e.g., raw materials) write-down. In particular, we show how the net realizable value (NRV) changes according to the value taken as a reference. The results of this analysis suggest that, based on a prudential valuation logic, the replacement cost is the best estimate for NRV.

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Perbandingan antara GAAP Indonesia dan GAAP Italia

Christian¹,

Angelica

Tanwijaya³

2022

MBIA

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Indonesia and Italy have been adopting IFRS in their national accounting standards. However, Indonesia’s GAAP is different from Italy’s GAAP. Hence, financial information users must be educated and understand both countries’ GAAP to interpret the financial report. The purpose of the research is to compare Indonesia’s GAAP and Italy’s GAAP. The research method uses descriptive qualitative analysis. The source of data is based on non-numeric secondary data. The research result shows eight factors that affect accounting development in Italy. There are also differences between Indonesia’s GAAP and Italy’s GAAP. Those differences are related to financial reports presentation, interests, dividends, goodwill, consolidated financial statements, and inventories. Keywords: Accounting standard, OIC, SAK, Italy, Indonesia Abstrak Indonesia dan Italia telah menerapkan IFRS pada standar akuntansi nasional negara masing-masing. Akan tetapi, GAAP Indonesia dengan GAAP Italia memiliki perbedaan dalam metode pencatatan akuntansi. Oleh sebab itu, untuk dapat memahami laporan keuangan yang disusun berdasarkan GAAP masing-masing negara, pengguna laporan keuangan perlu memiliki pemahaman dan menguasai pencatatan GAAP kedua negara tersebut. Tujuan dari penelitian ini adalah melakukan perbandingan antara GAAP Indonesia dan GAAP Italia. Metode penelitian yang diterapkan merupakan metode deskriptif kualitatif. Data penelitian yang digunakan bersifat data sekunder non numerik. Hasil dari penelitian ini menjukkan adanya 8 faktor yang memengaruhi perkembangan akuntansi di Italia. Selain itu, terdapat perbedaaan antara standar akuntansi Indonesia dan standar akuntansi Italia. Perbedaan tersebut terdiri dari segi pelaporan keuangan, bunga, dividen, goodwill, laporan keuangan konsolidasi dan persediaan. Kata kunci: Standar Akuntansi, OIC, SAK, Italia, Indonesia

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Lower Of Cost Or Market Inventory Valuation: IFRS Versus US GAAP

Cited by 3 publications

References 2 publications

The Enactment and Critique of International Accounting Standard Two

The Enactment and Critique of International Accounting Standard Two

Inventories Accounting under US-GAAP and IFRS Standards: The Differences That Hinder the Full Convergence

Perbandingan antara GAAP Indonesia dan GAAP Italia

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