TASK 3: 1. Under IFRS, what inventory accounting method(s)/ cost flow assumption(s) is/are Island Solutions allowed...

Transcribed Image Text:

TASK 3: 1. Under IFRS, what inventory accounting method(s)/ cost flow assumption(s) is/are Island Solutions allowed to use and prohibited from using? 6 m 2. The following data is available for the month of September for two items of inventory that might soon be render obsolete for Island Solutions. Inventory balances at September 1, 2023, were as follows: USB-C (TA3) Hub - 200 @ $400 ea. USB-C (TB3) Hub - 600 @ $800 ea. USB-C (TA3) HUB Date Purchases Sales Date USB-C (TB3) HUB Purchases Sales Sep 5 500 @$450 10 600 @ $900 10 500 @ $540 19 300 @ $950 15 20 400 @ $475 25 900 @ $1080 400 @ $570 28 500 @ $1000 25 300 @ $500 30 600 @ $1140 a. Assume that Island Solutions uses a periodic inventory system under the FIFO method, determine the cost of ending inventory and cost of goods sold at September 30, 2023, for the individual items and in total. (Show all workings) 16.5 m b. Assume that Island Solutions uses a periodic inventory system under the average cost method, determine the cost of ending inventory and cost of goods sold at September 30, 2023, for the individual items and in total. (Round to 2 decimal places) 30 m 3. What is the purpose of the current ratio? Assume that Island Solutions want to compute its current ratio, which inventory method (FIFO or Average Cost) would give a more meaningful current ratio. Explain. 3 m 4. Island Solutions has discovered that all of its competitors are using another inventory method and is worried. Can the company change its inventory accounting method, on what grounds? Discuss two (2) trade-offs for the company. 3 m 2 TASK 3: 1. Under IFRS, what inventory accounting method(s)/ cost flow assumption(s) is/are Island Solutions allowed to use and prohibited from using? 6 m 2. The following data is available for the month of September for two items of inventory that might soon be render obsolete for Island Solutions. Inventory balances at September 1, 2023, were as follows: USB-C (TA3) Hub - 200 @ $400 ea. USB-C (TB3) Hub - 600 @ $800 ea. USB-C (TA3) HUB Date Purchases Sales Date USB-C (TB3) HUB Purchases Sales Sep 5 500 @$450 10 600 @ $900 10 500 @ $540 19 300 @ $950 15 20 400 @ $475 25 900 @ $1080 400 @ $570 28 500 @ $1000 25 300 @ $500 30 600 @ $1140 a. Assume that Island Solutions uses a periodic inventory system under the FIFO method, determine the cost of ending inventory and cost of goods sold at September 30, 2023, for the individual items and in total. (Show all workings) 16.5 m b. Assume that Island Solutions uses a periodic inventory system under the average cost method, determine the cost of ending inventory and cost of goods sold at September 30, 2023, for the individual items and in total. (Round to 2 decimal places) 30 m 3. What is the purpose of the current ratio? Assume that Island Solutions want to compute its current ratio, which inventory method (FIFO or Average Cost) would give a more meaningful current ratio. Explain. 3 m 4. Island Solutions has discovered that all of its competitors are using another inventory method and is worried. Can the company change its inventory accounting method, on what grounds? Discuss two (2) trade-offs for the company. 3 m 2