Answered step by step
Verified Expert Solution
Question
...
1 Approved Answer
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 $)?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started