: Obtain the relevant authoritative literature on accounting for any topics cove

Question

: Obtain the relevant authoritative literature on accounting for any topics covered in the intermediate accounting 11 class using the FASB-IASB Codification Research System. Discussion similarities and differences between the accounting treatment for U.S. GAAP and IFRS

We have to do a discussion on the above topic- obtain authoritative literature using the FASB-IASB Codification Research System for Inventory, and Discuss some similarities and differences between the accounting treatment for U.S. GAAP and IFRS.

Explanation / Answer

As we are aware that there are some difference in accounting treatment as per U.S.GAAP and IFRS. In case of accounting treatment of various accounting transactions GAAP and IFRS suggest for different treatment. But it is also true that in some case both U.S.GAAP and IFRS suggest for similar treatment.

So overall we can say that U.S.GAAP and IFRS may be same or differ on ceratin accounting transactions. Thus as per requirement of the question let’s discuss similarities and difference between U.S.GAAP and IFRS on the treatment of inventory.

Similarity between U.S.GAAP and IFRS;

1. Both U.S.GAAP and IFRS are based on the principle that cost is the primary basis of accounting for inventory. Hence from this point of view both U.S.GAAP and IFRS are same.

2. U.S.GAAP and IFRS both define inventory in same meaning. Hence from explanation point of view both are same.

Differences between U.S.GAAP and IFRS;

1. Relevant guidelines of inventory under U.S.GAAP are given as ASC 330 whereas relevant guidelines of inventory under IFRS are given as IAS-2

2. As per U.S.GAAP use of LIFO method is permitted whereas use of LIFO method under IFRS is prohibited.

3. As per U.S. GAAP, inventory is subsequently measured at the lower of cost or market price whereas as per IFRS, inventory is subsequently measured at the lower of cost or net realizable value.

4. As per U.S. GAAP, reversals of writedowns are prohibited whreas as per IFRS, reversals of writedowns are required.

Thus on the basis of above explanation, it is clear that there are some similarities and some differences between U.S. GAAP and IFRS about the treatment of inventory.

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