Determine the impact that a switch to ifrs

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Reference no: EM132950449

Question: Company Z is a U.S-Based company that prepares its consolidated financial statements in accordance with U.S.GAAP. The company reported income in 2019 of 4,000,000 and stockholders equity at December 12/31/2019, of 32,000,000.

The CFO of Company Z wishes to determine the impact that a switch to IFRS would have on its financial statements and has engaged you to prepare a reconciliation of income and stockholders' equity from U.S.GAAP to IFRS.

You have identified the inventory as a one of areas in which Company Z accounting principles based on U.S.GAAP differ from IFRS. Company Z provides the following information with respect to Inventory as a one of these accounting differences: Inventory: At year-end 2019, inventory had a historical cost of 1,000,000, a replacement cost of 730,000, a net realizable value of 760,000, and a normal profit margin of 20% of net realizable value. After prepare a reconciliation schedule to convert 2019 income from a US.GAAP basis to IFRS, the income statement in 2019 will report:_. A-Decrease in income by 30.000 B-None of these answer choices are correct C-Increase in income by 270.000 &D-Decrease in income by 270.000 Decrease in income by 240.000 Increase in income by 30.000 Increase in income by 240.000

Reference no: EM132950449

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