Q1ISTQ
Question
All of the following are key similarities between GAAP and IFRS with respect to accounting for inventories except: (a) costs to include in inventories are similar. (b) LIFO cost flow assumption where appropriate is used by both sets of standards. (c) fair value valuation of inventories is prohibited by both sets of standards. (d) guidelines on ownership of goods are similar
Step-by-Step Solution
Verified Answer
The correct option is “b.”
1Step1: LIFO cost flow assumption
(b) LIFO cost assumption is permitted by the GAAP but is prohibited under IFRS.
2Step2: Explanation of wrong options
(a) Under GAAP and IFRS, the costs included in the inventories are the same.
(c) Both GAAP and IFRS prohibit the fair value valuation method.
(d) Guidelines of ownership are similar under both.
Thus, the correct option is the second one.
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