At the End of the Year,Katerinos Company Is Applying the Lower-Of-Cost-Or-Market

question 61

Essay

At the end of the year,Katerinos Company is applying the lower-of-cost-or-market rule to inventory.The company uses the perpetual inventory system.The company has the following data before year-end adjustments:
Required:
1.Following U.S.GAAP,prepare the required journal entry at year-end.The company uses the direct method when applying the lower-of-cost-or-market rule.
2.Following IFRS,prepare the required journal entry at year-end.The company uses the direct method when applying the lower-of-cost-or-market rule.

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Definitions:

Dividends Paid

The part of a corporation's profits paid out to its shareholders, typically as cash or more stocks.

Discount

It is a reduction from the usual cost of something, often applied to encourage early payment or to reward bulk purchases.

Interest Expense

The cost incurred by an entity for borrowed funds over a period of time, typically expressed in terms of an annual percentage rate.

Market Interest Rate

The current rate of interest available in the market that borrowers must pay to obtain funds.