FIFO and LIFO accounting Essays

The choice of inventory accounting methods, specifically for the case of FIFO and LIFO, has developed into a decision, which includes varying consequences and comes with specific implications and benefits, such as communicating private information with FIFO (Hughes, and Schwartz, 1988, p.42) or tax benefits for the choice of LIFO (Morse and Richardson, 1983, p.125). Every firm and manager has to face the decision of which accounting method to choose, and has to include several aspects into their

I have chosen Nobes because there are more related articles and essays can be searched from the web, also the international accounting differences across the countries in accounting treatment is controversial issue nowadays. Differences reporting standard in accounting treatment across the countries can result in significantly different amounts being reported on the balance sheet and income statement. These differences will have impacts on cross country merger or acquisition and cross-border company

Ethics case 19-3 deals with issues related to a company changing its inventory method from LIFO to FIFO and any perceived ethical dilemmas that might be involved due to stock options being influenced by the company’s net income. Often times, companies will change their inventory method due to changing circumstances such as different economic conditions, changes within an industry, or even from a mandated change by the FASB (Spiceland, Sepe, & Nelson, 2013). The reason the company in this question

This may be why the company uses FIFO for its inventory management. We have learned that LIFO is used by companies to defer their income tax payments. In the contrast, the FIFO records costs of inventories at a lower cost compared to LIFO; therefore, companies can provide better-looking financial statements. JC Penney as a retail store, the company must record high sales to proof its value to investors; therefore, it is understandable that the company uses FIFO method for its inventory management

Concepts: 1.CVS and Walgreens have opposite inventory methods that are used in their day to day sales. CVS used the First-In-First-Out (FIFO) method for their inventory. In this method the earliest goods purchased are the ones that sell first. For inventory recording CVS would use the price of the most recent purchase of products to determine their inventory value. Following this the ending inventory is subtracted from this to get a cost of goods sold. For recording purposes this is one of the better

FASB presented Accounting Standards Update (ASU) 2015-11 – Inventory (Topic 330) as part of its “Simplification Initiative. The objective of the Simplification Initiative is to identify, evaluate, and improve areas of generally accepted accounting principles (GAAP) for which cost and complexity can be reduced while maintaining or improving the usefulness of the information provided to users of financial statements.” (FASB, page 1) The thought process for this update appears to be FASB’s attempt

There are two governing accounting bodies that set the standards for accounting policies and procedures. First, the Financial Accounting Standards Board (FASB) which operates within a set of Generally Accepted Accounting Principles (GAAP). GAAP is used solely by the United States and is followed by all firms who release financial statements to the public. Second, the International Financial Reporting Standards (IFRS) sets principles that are followed by all other countries. Despite some similarities

Difference between GAAP and IFRS The GAAP and the IFRS are the two accounting standards that are used by businesses. The IFRS is used in over 120 countries, especially countries in the European Union while the GAAP is used primarily in the United States. Although the two standards serve the same purpose, there are some differences in the way they operate. The most outstanding difference between the two is that while the GAAP is based on rules, the IFRS is based on principles. Unlike a rule based

from General Accepted Accounting Principles (GAAP) to the International Financial Reporting Standards they will first have to follow the IFRS 1, which is the First Time Adoption of International Financial Reporting Standards. The IFRS 1 is the structure pertinent to those implementing IFRS for the first time (Gornik-Tomaszewski & Sellhorn, 2010). In order to transition from GAAP to IFRS companies need to undertake three steps. Those steps include 1) Selecting an accounting practice that is in compliance

If an account as several smaller transactions that seem off and probably could use some investigation, accounting is likely to overlook them as they are deemed immaterial and would cause no impact on the financial statement; not to mention the time and money wasted looking into a few cents here or there. However, small transactions can add up to and cause a

estimates that approximately 95% of their inventories in 2015 were valued using the LIFO method. Cost for the remainder of their inventories, including almost all fuel inventories, was determined using the First in First Out (FIFO) method. Kroger utilizes the Item Cost Method to determine its inventory cost before the LIFO adjustment for their store inventories. The reason Kroger employs the item-cost method of accounting is that it allows Kroger a more accurate reporting strategy for periodic inventory

Accounting policies Principles of Consolidation The Consolidated Financial Statements include the accounts of Walmart and its subsidiaries as of and for the fiscal years ended January 31, 2014 ("fiscal 2014"), January 31, 2013 ("fiscal 2013") and January 31, 2012 ("fiscal 2012"). All material intercompany accounts and transactions have been eliminated in consolidation. Investments in unconsolidated affiliates, which are 50% or less owned and do not otherwise meet consolidation requirements, are

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (G.A.A.P) GAAP is an international convention of good accounting practices. It is based on the following core principles. In certain instances particular types of accountants that deviate from these principles can be held liable. The Business Entity Concept:- The business entity concept provides that the accounting for a business or organization be kept separate from the personal affairs of its owner, or from any other business or organization. This means

Financial Accounting is a field of accounting concerned with a company’s financial transactions. It uses standardized accounting guidelines to record, summarize and present the transactions to mainly external users periodically by means of Financial Statements. Creditors and other lenders like banks and other financial institutions, Government Authorities, Prospective Investors, Customers, Competitors and Regulatory Authorities are some of the External Users who may use these Accounting information

1532). Inventory. It is assumed to increase when the economy is expanding and the firm opens new stores; generally, it is affected by managerial efficiency, location, marketing, segment, and economic conditions. Depending on the valuing method (FIFO, LIFO), inventory and cost of goods sold estimation may considerably vary. Gaur, Fisher, and Raman (2005, p. 186) evidenced annual inventory turnover correlation to gross margin (negative), the ratio of fixed to total assets (positive), and the ratio

inventory cost is determined using the First-in, First-out method (FIFO).In which the oldest cost is matched against revenue and assigned to cost of gods sold. Delta Airlines inventory is tracked with jet fuel, refined oil product and refinery, the company owns a refinery acquired on June 2012. Spare parts also account

Francisco Colin Professor John Valenzuela Accounting 465 21 October 2014 Case #2 Basis of Accounting In order for Chris to convert financial statements from U.S. GAAP to IFRS successfully, Ruckman, Inc. needs to include a balance sheet, income statement, statement of comprehensive income, changes in equity statement, cash flow statement, and footnotes to the statements. Like U.S. GAAP, IFRS recommends to separate current and non-current assets and liabilities on the balance sheet. First, Chris

and the type of products and services they provide. Each of these companies, (General Motors Company, Target Corporation and Werner Enterprises, Inc.) officers a different type of product or service and manages inventory, if any, using different accounting methods. General Motors Company is a car manufacturer that designs, builds, and sells various vehicle models as well as vehicle parts and financial services available to customers during and after a vehicle is purchase (10-K Report, Page 1-5). On

Adjusting Entries “Adjusting entries update the financial records for events that have occurred, but no document for a transaction exists (McIntosh 2016).” There are several types of adjusting entries such as depreciation, prepaid expenses, and supplies. On its balance sheet, Kroger lists prepaid and other current assets. A company would definitely want to show these items because without them they are not correctly reporting items. It can cause a misrepresentation of the figures that are reported

CONSOLIDATED STATEMENT OF EARNINGS (INCOME STATEMENT) The Home Depot, Inc. Income Statement can be found on the SEC 10-K Annual Report on page 33, where it reflects the financial results of how the company operating activity faired in the 52-53 week / fiscal period ending January 29,2017, for 2016, in generating revenue. Per The Home Depot Subsidiaries Consolidated Statement of Earnings (Income Statement) of 2016 fiscal year, the net sales of $94,595 (amount in USD millions). The net sales final