The Following Information Pertains to Inventory Held by a Company

question 23

Multiple Choice

The following information pertains to inventory held by a company at December 31, 2011. As a result of inventory loss, what is the difference in income between reporting using U.S. GAAP and IFRS?

• A) U.S. GAAP income is $1,000 higher.
• B) U.S. GAAP income is $2,000 lower.
• C) IFRS income is $1,000 higher.
• D) IFRS income is $1,000 lower.
• E) IFRS income is $5,000 higher.

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Definitions:

Jobs

Individual units or batches of work that can be distinguished from each other in a manufacturing or service delivery process.

Supplies Cost

The cost associated with materials and items used in the operation of a business but not directly tied to the products being manufactured or services provided.

Spending Variance

The difference between the actual amount of money spent and the budgeted or planned amount of expenditure.

Cost Formula

An equation used to predict the total cost of production, combining both fixed and variable costs, based on the level of activity or volume.