Lower-of-cost-or-market valuation for inventory; U.S. GAAP versus IFRS. Fortune Brands reported a carrying value of its total

Question:

Lower-of-cost-or-market valuation for inventory; U.S. GAAP versus IFRS. Fortune Brands reported a carrying value of its total inventory as of December 31, 2007, of $2,047.6 million; the corresponding figure for December 31, 2006, was $1,937.8. Fortune Brands applies U.S. GAAP and reports its results in millions of U.S. dollars ($)

a. Suppose that on January 1, 2008, the market value of Fortune Brands’ inventory increased to $2,300.0 million. What journal entry, if any, should Fortune Brands record on January 1?

b. Suppose that on January 1, 2008, the market value of Fortune Brands’ inventory decreased to $1,880.6 million. What journal entry, if any, should Fortune Brands record on January 1?

c. Continuing the scenario in part b. suppose that the market value of the inventory previously written down increased to $1,962.3 million on February 16, 2008. What journal entry, if any, should Fortune Brands record on this date?

d. Would your answers to parts a. b. and c differ if Fortune Brands applies IFRS?

GAAP
Generally Accepted Accounting Principles (GAAP) is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC). While the SEC previously stated that it intends to move from U.S. GAAP to the International Financial Reporting Standards (IFRS), the...