The IFRS Disallow the Use of LIFO for External Financial

question 38

Essay

The IFRS disallow the use of LIFO for external financial reporting.Assume a U.S.based company has been using LIFO for financial and tax reporting but now wants to prepare IFRS conforming financial statements to enable its stock to be traded on one of the European stock exchanges.
Required:
a. Describe the adjustments that the US.-based company must make to its accounting records to conform with IFRS.
b. What choices of invent ony accounting metho ds would be available to the U.S. company uncler IFRS?

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Definitions:

Absolute Advantage

The ability of a country or entity to produce a good or service more efficiently than another country or entity.

Comparative Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower opportunity cost than competitors.

Trade

The process of purchasing, selling, or trading goods and services among individuals, companies, or nations.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, resulting in market balance without excess supply or demand.