For Purposes of Interim Reporting, US-GAAP Permits Certain Modifications to Year-End

question 17

Essay

For purposes of interim reporting, US-GAAP permits certain modifications to year-end inventory rules.
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Required:
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Comment on the acceptability of the following independent situations concerning inventory valuation for an interim period:
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a.Management believes that since its firm does not have a perpetual inventory system, it would be too costly to take a physical inventory.Consequently, management has suggested to the accounting department that they estimate ending inventory.?
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b.Since the LIFO inventory base was liquidated in the first quarter, management has recommended that the accounting department switch to FIFO valuation of inventory.?
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c.Since the first quarter is a slow period for a manufacturing firm, management has suggested that the unfavorable volume variances from the firm's standard cost system be deferred until year end.

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