Sier Specialty Corp., a division of FH Inc., manufactures three models of bicycle gearshift components that are sold to bicycle manufacturers, retailers, and catalogue outlets. Since beginning operations in 1969, Sier has used normal absorption costing and has assumed a first-in, first-out cost flow in its perpetual inventory system. Except for over-head, manufacturing costs are accumulated using actual costs. Overhead is applied to production using predetermined overhead rates. The balances of the inventory accounts at the end of Sier's fiscal year, September 30, 2017, follow. The inventories are stated at cost before any year-end adjustments.

Finished goods ............................. $757,000

Work in process ............................. 192,500

Raw materials ................................ 300,000

Factory supplies .............................. 69,000

The following information relates to Sier's inventory and operations:

1. The finished goods inventory consists of these items:

2. Half of the finished goods inventory of head tube shifters is at catalogue outlets on consignment.
3. Three-quarters of the finished goods inventory of bar end shifters has been pledged as collateral for a bank loan.
4. Half of the raw materials balance is for derailleurs acquired at a contracted price that is 20% above the current market price. The net realizable value of the rest of the raw materials is $135,500.
5. The total net realizable value of the work-in-process inventory is $105,500.
6. Included in the cost of factory supplies are obsolete items with a historical cost of $4,200. The net realizable value of the remaining factory supplies is $65,900.
7. Sier applies the lower of cost and net realizable value method to each of the three types of shifters in finished goods inventory. For each of the other three inventory accounts, Sier applies the lower of cost and net realizable value method to the total of each inventory account.
8. Consider all of the amounts presented above as being material amounts in relation to Sier's financial statements as a whole.
Instructions
(a) Assuming that ASPE is followed, prepare the inventory section of Sier's statement of financial position as at September 30, 2017, including any required note(s).
(b) Regardless of your answer to (a), assume that the net realizable value of Sier's inventories is less than cost. Explain how this decline would be presented in Sier's income statement for the fiscal year ended September 30, 2017, under ASPE.
(c) Assume that Sier has a firm purchase commitment for the same type of derailleur that is included in the raw materials inventory as at September 30, 2017, and that the purchase commitment is at a contracted price that is 15% higher than the current market price. These derailleurs are to be delivered to Sier after September 30, 2017. Discuss the impact, if any, that this purchase commitment would have on Sier's financial statements prepared for the fiscal year ended September 30, 2017, under ASPE.
(d) How would your response to (c) change under IFRS?
(e) Explain and compare the disclosure requirements under ASPE and IFRS.

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Cost Net realizable value Down tube shifter $97,500 94,500 108,000 300,000 67,000 87,000 110,000 Standard model Click adjustment model Deluxe model Total down tube shifters 264,000 Bar end shifter Standard model Click adjustment model 133,000 79,000 212,000 120,050 108,150 Total bar end shifters 228,200 Head tube shifter Standard model Click adjustment model 128,000 117,000 245,000 $757,000 103,650 145,300 248,950 $741,150 0 Total head tube shifters Total finished goods