Question

Lisali Company gathered the following information related to inventory that it owned on December 31, 2015:

  Historical cost

$

213,000

  Replacement cost

206,150

  Net realizable value

208,450

  Normal profit margin

20

%

	U.S GAAP	IFRS
Inventory on Dec 31 ,2015, balance
Amt reported in net income/loss

a.	Determine the amount at which Lisali should carry inventory on the December 31, 2015, balance sheet and the amount, if any, that should be reported in net income related to this inventory using (1) U.S. GAAP and (2) IFRS.

     

b.	Determine the adjustments that Lisali would make in 2015 to reconcile net income and stockholders’ equity under U.S. GAAP to IFRS. (If there is no reconciliation adjustment select "No adjustment is required to".)

     

	2015 Adjustments
	US GAAP Net income
	U S GAAP Stockholders equity

Answer 1

a)

	US GAAP	IFRS
Inventory will reported on Dec 31, 2015 Balance sheet	$ 206,150	208450
Amount reported in net income / (loss)	$    (6,850)	$ (4,550)

As per US GAAP Inventory will report at lower of cost or replacement cost(market cost)

As per IFRS inventory will report at lower of cost or net realizable value

2.

2015 adjustments
Amount added to	US GAAP Net income	$ (2,300)
Amount added to	US GAAP Stockholders equity	$ (2,300)

difference of inventory value between US GAAP reporting and IFRS reporting