IFRS Activity 3 Under U.S. GAAP, LIFO is an acceptable inventory method. Financi
ID: 2528308 • Letter: I
Question
IFRS Activity 3 Under U.S. GAAP, LIFO is an acceptable inventory method. Financial statement information for three companies that use LIFO follows. All table numbers are in millions of dollars. IFRS REAL WORLD LIFO Inventory Inventory Net Income Current Total Net Income as Reported FIFO Impact on (from from Using Assets notes) LIFO Rather than FIFO (from notes) $317 (57) Exxon Kroger Ford Motor $9,852 4,966 5,917 $31,200 5,793 6,782 $58,984 7,621 34,368 $30,460 1,116 4,690 4 Assume these companies adopted IFRS, and thus were required to use FIFO rather than LIFOExplanation / Answer
Requirement A & B Table 1 2 3 4 FIFO Less LIFO IFRS Net income (FIFO Less LIFO) / Total current assets IFRS Net income / Reported Net Income Company Exxon 21348 30143 36.19286586 98.95929087 Kroger 827 1173 10.85159428 105.1075269 Ford Motor 865 4686 2.516876164 99.91471215 Requirement C Because of change to IFRS for inventory valuation, Exxon have the largest percentage impact on total current assets Requirement D Because of change to IFRS for inventory valuation, kroger have the largest percentage impact on net income Requirement E It might be because Kroger have those inventory in hand which has lower prices in earlier period compared to higher prices in recent period.