Inventory_slides - Inventory Typical coverage of US GAAP...

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Inventory
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Inventory Page 2 Typical coverage of US GAAP Definition and scope Perpetual vs. periodic systems Physical goods and costs included in inventory Effects of inventory errors Cost flow assumptions Specific identification Average cost methods First-in, first-out method (FIFO) Last-in, first-out method (LIFO) (including dollar-value LIFO) Retail inventory method (RIM) Lower of cost or market Disclosures
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Inventory Page 3 Executive summary IFRS does not permit the LIFO method of costing inventory, unlike US GAAP. IFRS reports inventory at the lower of cost or net realizable value (LCNRV). US GAAP reports inventory at the lower of cost or market (LCM), where market is defined as a replacement cost with a floor (NRV less normal profit margin) and a ceiling (NRV). IFRS allows reversals of prior inventory write-downs to be made and recognized in income, unlike US GAAP.
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Inventory Page 4 Primary pronouncements US GAAP ASC 330, Inventory IFRS IAS 2, Inventories
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Inventory Page 5 Progress on convergence There are no convergence efforts at this time.
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Inventory Page 6 Definition and scope Inventory includes finished goods, work-in- progress and raw materials. Inventory is recognized when risk and rewards pass to entity. Similar Similar IFRS US GAAP
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Inventory Page 7 Definition and scope US GAAP Intangible assets produced for resale (e.g., software) are not included in inventory. ASC 908, Agriculture, is used to scope out agricultural products and commodities. IFRS Intangible assets produced for resale are included in inventory. IAS 41, Agriculture, is used to scope out agricultural products and commodities.
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Inventory Page 8 Perpetual vs. periodic systems Both systems are allowed. Similar IFRS US GAAP
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Inventory Page 9 Physical goods and costs included in inventory Costs include productions costs, conversion costs and purchase costs. Cost includes freight-in. Similar Similar Interest must generally be capitalized. Similar, although certain conditions must be met. IFRS US GAAP
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Inventory Page 10 Physical goods and costs included in inventory US GAAP No guidance is provided on storage costs. IFRS Storage costs are usually expensed.
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Inventory Page 11 Cost flow assumptions Specific identification, average cost, FIFO and RIM are allowed. Similar IFRS US GAAP
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Inventory Page 12 Cost flow assumptions IFRS The same cost flow assumptions must be used for inventory with a similar nature and use even if inventory is held in different geographic locations and/or by different entities. LIFO method is
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Inventory_slides - Inventory Typical coverage of US GAAP...

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