The Following Information Pertains to Inventory Held by a Company

question 44

Multiple Choice

The following information pertains to inventory held by a company on 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 $3,000 higher.
• B) U.S. GAAP income is $10,000 lower.
• C) IFRS income is $8,400 higher.
• D) IFRS income is $3,000 lower.
• E) IFRS income is $5,400 higher.

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Definitions:

Dividend Declaration

The action by a company's board of directors to set the amount and date of a dividend payment to shareholders.

Noncumulative

Pertaining to dividends or preferred stock where undeclared or unpaid dividends do not accumulate and are not owed in future periods.

Common Stockholders

Individuals or entities that own shares of a company's common stock, granting them voting rights and a share of the company's profits through dividends.

Dividend Payment

A dividend payment is a distribution of a portion of a company's earnings to its shareholders, typically made in cash or additional stock.