5. Under IFRS, inventories are classified as a. noncurrent assets b. current assets c. stockholders' equity d. current liabilities Use the following information to answer questions 6-8. Barton Company uses a periodic inventory system. On January 1, 2012, Barton Company had 600 units of inventory on hand at a cost of $8 per unit. During 2012, Barton made the following inventory purchases. April 1 Purchased 200 units at $10 June 1 Purchased 150 units at $12 September 1 Purchased 400 units at $14 November 1 Purchased 500 units at $15 Assume Barton Company sold 1,150 units of inventory during 2012. 6. If you assume that Barton follows IFRS and uses the FIFO method, what is the ending inventory and cost of goods sold, respectively? 7. If you assume that Barton follows IFRS and uses the Average-cost method, what is the ending inventory and cost of goods sold, respectively?
8. Based on your answers to Questions 6 and 7, which of the following is a disadvantage of using the IFRS FIFO method, as compared to Average-cost under U.S. GAAP? 9. Which of the following is an advantage for U.S. companies with international operations to use LIFO for U.S. purposes, as opposed to using FIFO for foreign subsidiaries? a. LIFO creates paper profits. b. LIFO generally approximates the physical flow of items. c. Under LIFO, inventory is less vulnerable to price declines. d. LIFO eliminates balance sheet distortion. 10. Both U.S. GAAP and IFRS exclude which of the following from the cost of inventory? Answer to Multiple Choice. 1. d 2. a 3. a 4. c 5. b 6. d 7. c 8. b 9. c 10. d
- Spring '12
- Accounting, Fourteenth Edition