1. Briefly describe some of the similarities and differences between GAAP and IFRS with respect to the accounting for inventories.
2. LaTour Inc. is based in France and prepares its financial statements in accordance with IFRS. In 2012, it reported cost of goods sold of $578 million and average inventory of $154 million. Briefly discuss how analysis of LaTour’s inventory turnover ratio (and comparisons to a company using GAAP) might be affected by differences in inventory accounting between IFRS and GAAP.
3. Reed Pentak, a finance major, has been following globalization and made the following observation concerning accounting convergence: “I do not see many obstacles concerning development of a single accounting standard for inventories.” Prepare a response to Reed to explain the main obstacle to achieving convergence in the area of inventory accounting.
4. Briefly describe the valuation of (a) biological assets and (b) agricultural produce.