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  • 1.  cma part 1

    Posted 10-14-2019 04:18 AM
    hello
    A multinational company maintains its financial records under both IFRS and U.S. GAAP. Last year, the company determined its inventory was impaired because demand for its product collapsed when a competitor launched a new product with innovative features. As a result, the company wrote down its inventory to $0 with a carrying amount of $500,000. This year, however, government authorities unexpectedly announced that the competitor's product was defective and the product was removed from the market. As a result, the company's products were again in demand and the company estimated their net realizable value to be $750,000 at the end of the current quarter. How should the company record this new development in the current quarter?
    a. Under IFRS, $0 write-up of the inventory; under U.S. GAAP, $0 write-up of the inventory.
    b. Under IFRS, $500,000 write-up of the inventory; under U.S. GAAP, $0 write-up of the inventory.
    c. Under IFRS, 750,000 write-up of the inventory; under U.S. GAAP, $0 write-up of the inventory.
    d. Under IFRS, $750,000 write-up of the inventory; under U.S. GAAP, $750,000 write-up of the inventory.
    Please help


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    FIRDDAUS KUDOOR
    India
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  • 2.  RE: cma part 1

    Posted 10-14-2019 04:23 AM
    Answer is -B

    Sent from my iPhone



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  • 3.  RE: cma part 1

    Posted 10-15-2019 02:16 AM
    Answer is -B



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  • 4.  RE: cma part 1

    Posted 10-15-2019 02:02 AM
    Answer :B
    Under IFRS; Asset impairment write down value can be write up  if its recover its value even though the value written down in the previous period but in US GAAP its possible only if its within the same year, and previous year written down value cannot be reversed.


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    Tamilarasan Ganesan
    Analyst
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    Original Message


  • 5.  RE: cma part 1

    Posted 10-15-2019 03:38 AM
    Answer c

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    Ayat Elsawy
    Accountant
    Elmontaza
    Egypt
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    Original Message


  • 6.  RE: cma part 1

    Posted 10-15-2019 05:09 AM
    I  think that the correct answer is B , under FIRS  its allowance to write up inventory but not exceeding the write down already done  , so its allowance to write up to 500,000$ that already write down , under GAAP,  write up of inventory is zero
    best regard




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  • 7.  RE: cma part 1

    Posted 10-15-2019 05:20 AM
    Answer B.
    Under IFRS inventory write off can be write up based on its current value even though its written off in the last period and under US GAAP inventory value write up possible only within the current period, previous period write off cannot be reversed under US GAAP..

    Regards,
    Tamilarasan. 



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  • 8.  RE: cma part 1

    Posted 10-15-2019 05:43 AM
    IFRS allows a write-up but not beyond the original value of inventory. GAAP does not allow a write-up. 

    A hint that works MOST of the time is GAAP is more strict than IFRS on almost everything

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    Craig Calvert
    Analyst
    Brandenburg KY
    United States
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    Original Message


  • 9.  RE: cma part 1

    Posted 10-15-2019 04:57 PM

    Answe is b.

    Under IFRS, Inventory previously written down for lower of cost or net realizable value issues can be written written-up to original cost (i.e. $500,000) if there is a recovery.

    U.S. GAAP does not allow write-up of inventory previously written down unless both the write down and the recovery occur within the same fiscal year. So, $0 under U.S. GAAP.



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    Felix Lawson
    Finance Analyst
    Kenya
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    Original Message