Question
To determine the amount at which inventory should be reported on the December 31, Year 1, balance sheet, Monroe Company compiles the following information for
To determine the amount at which inventory should be reported on the December 31, Year 1, balance sheet, Monroe Company compiles the following information for its inventory of Product Z on hand at that date:
Historical cost | $20,000 |
Replacement cost | 14,000 |
Estimated selling price | 17,000 |
Estimated costs to complete and sell | 2,000 |
Normal profit margin as a percentage of selling price | 20% |
The entire inventory of Product Z that was on hand at December 31, Year 1, was completed in Year 2 at a cost of $1,800 and sold at a price of $17,150.
Required:
Determine the impact that Product Z has on income in Year 1 and in Year 2 under (1) IFRS and (2) U.S. GAAP.
Summarize and discuss the difference in income, total assets, and total stockholders' equity using the two different sets of accounting rules over the two-year period.
Do not forget to include proper APA formatting and citation where necessary. Do not forget to respond to the other cases this week.
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