Discuss the different sets of accounting rules

Reference no: EM131967200

Question: 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.

Reference no: EM131967200

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