Consider the following data, related to inventory items of New Frontier, Inc. De
ID: 2341243 • Letter: C
Question
Consider the following data, related to inventory items of New Frontier, Inc. Determine what inventory values should the company report at the end of the period under IFRS and under U.S. GAAP. Complete the table below.
Item Cost Replacement NRV NRV* less Market Inventory Inventory NPM Value | IFRS Cost under US GAAP Value | US GAAP A S 2.00 1.80 B 4.00 C 6.00 D 5.00 E 1.00 Net Realizable Value (NRV) Normal Profit Margin (NPM) 4.60 6.60 4.75 1.05 S 2.00 1.40 4.24 7.20 2.80 1.80 3.20 5.80 4.00 0.95Explanation / Answer
Item
Cost
Replacement Cost
NRV
NRV less NPM
Market Value under US GAAP
Inventory Value under US GAAp
Inventory Value under IFRS
A
2.00
1.80
2.00
1.40
1.80
1.80
2.00
B
4.00
4.60
3.20
4.24
4.24
4.00
3.20
C
6.00
6.60
5.80
7.20
6.60
6.00
5.80
D
5.00
4.75
4.00
2.80
4.00
4.00
4.00
E
1.00
1.05
0.95
1.80
1.05
1.00
0.95
Inventory Value under US GAAP :
Inventory Value = Lesser of Cost or Market Value
Market Value = Middle Value among Replacement cost, NRV and NRV less NPM
Inventory Value under IFRS :
Inventory Value = Lesser of Cost or Net Realisable Value
Item
Cost
Replacement Cost
NRV
NRV less NPM
Market Value under US GAAP
Inventory Value under US GAAp
Inventory Value under IFRS
A
2.00
1.80
2.00
1.40
1.80
1.80
2.00
B
4.00
4.60
3.20
4.24
4.24
4.00
3.20
C
6.00
6.60
5.80
7.20
6.60
6.00
5.80
D
5.00
4.75
4.00
2.80
4.00
4.00
4.00
E
1.00
1.05
0.95
1.80
1.05
1.00
0.95
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