How Do IFRS and U

question 16

Multiple Choice

How do IFRS and U.S. GAAP differ in their approach to allowing reversals of inventory write-downs?

• A) If they had not been previously recorded as separate assets by the acquired company, they should always be recorded as "Goodwill" on the balance sheet of the company acquiring them.
• B) The cost of the intangibles should be expensed by the acquiring company on the merger date.
• C) They should be recorded as separate intangible assets only if their useful life is indefinite.
• D) IFRS requires the reversal of write-downs from cost to net realization value (NRV) when the selling price increases. U.S. GAAP prohibits the reversal of past write-downs.

---

Definitions:

Customer Account

An account held by a business that details the transactions and financial relationship between the business and a specific customer.

Allowance Method

An accounting technique used to estimate and account for potential uncollectible debts.

Bad Debts Expense

Expenses linked to accounts receivable that a firm anticipates will not be collected.

Allowance Method

An accounting technique used to account for bad debts, which estimates uncollectible accounts receivable and creates a provision for them.