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To determine the amount at which inventory should be reported on the December 31, Year 1 balance sheet, Monroe Company compiles the following information for its inventory of product z on hand at the date:

Historical cost.....................................................................$20,000
Replacement cost................................................................$14,000
Estimated selling price.........................................................$17,000
Estimated costs to complete and sell...................................2,000
Normal profit margin as a percentage of selling price.........20%

The entire inventory of product Z that was on hand at Dec. 31, Year 1 was completed in Year 2 at cost of $1,800 and sold at a price of $17,150.

a. Det. the impact that Product Z has on income in Year 1 and Year 2 under IFRS and US GAAP

b. Summarize the difference in income, total assets, and total stockholders' equity using the two different sets of accounting rules over the two year period.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M943255

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