Question
AB Company prepares its financial statement using US GAAP. They adopted the LIFO method of accounting for inventory several years ago. You are trying to
- AB Company prepares its financial statement using US GAAP. They adopted the LIFO method of accounting for inventory several years ago. You are trying to analyze their results for 2022 as if they were on IFRS. You have been given the following information for the income statement and balance sheet, which is based on the LIFO method. (4 Points)
2022 Income Statement Excerpt:
| Sales | $11,500,000 | |
| COGS | 9,700,000 | |
| Gross Margin | $1,800,000 |
Balance Sheet Excerpt:
| 12/31/21 | 12/31/22 | ||
| Inventories (FIFO) | $650,000 | $720,000 | |
| LIFO Adjustment | (110,000) | (135,000) | |
| Inventories (LIFO) | $540,000 | $585,000 |
A. Compute the gross margin for AB Company, assuming they used the FIFO method of accounting for inventories.
B. Ignoring the impact of taxes, what is the difference in shareholders' equity between the US GAAP and IFRS financial statements at 12/31/22? Indicate which is greater (i.e., is shareholders' equity US GAAP higher/lower/same as compared with IFRS and by what amount $)?
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Introduction to Real Analysis
Authors: Robert G. Bartle, Donald R. Sherbert
4th edition
978-0471433316
