This study purposes of understanding the existing differences between US-GAAP and IFRS accounting treatments of inventory. Given the 2015 FASB update, aimed at simplifying and aligning inventory accounting with IFRS standards, the research explores the introduced innovations. More specifically, the study, starting from a literature review and standards analysis, designs a theoretical framework aimed at facilitating the understanding of the differences still existing between the two accounting principles. Different from the prior works, we focus on the complex determination of the net realizable value in the case of input (e.g., raw materials) write-down. In particular, we show how the net realizable value (NRV) changes according to the value taken as a reference. The results of this analysis suggest that, based on a prudential valuation logic, the replacement cost is the best estimate for NRV.

/pdf/inventories-accounting-under-us-gaap-and-ifrs-standards-the-3fprfvkvu8.pdf

Inventories Accounting under US-GAAP and IFRS Standards: The Differences That Hinder the Full Convergence

A Further Comment on Asset Values and Income Measurement

. o o o o . . . . . . . . . . . . . . . . . . x Chapter

/pdf/investors-reaction-to-the-replacement-cost-information-15kwovuqib.pdf

Investors' reaction to the replacement cost information provided as a result of ASR #190 : some empirical results

Publisher Summary
This chapter discusses revenue. Revenue may be defined as the aggregate exchange value of the products or services of the business. The exchange value may be expressed by the inflow of cash or by the increase of another asset—normally debtors. The recognition of revenue is established by the realization postulate. According to this postulate, revenue is recognized as soon as it is capable of objective measurement, and the asset value received in exchange is reasonably certain. This postulate gives rise to four categories. Recognition of revenue at time of sale is the first and most important category. The fourth category involves the recognition of revenue when cash is received. If it is certain that a debtor will not settle his account, the debt is treated as bad and the amount lost treated as an expense. In addition, a business will know by experience that a percentage of debtors will probably default, and accordingly a provision is made for doubtful debts.

4 – Income measurement—revenue

(1973). Accounting Fundamentals: Guides to Human Judgment. Accounting and Business Research: Vol. 3, No. 11, pp. 205-212.

Accounting Fundamentals: Guides to Human Judgment

(1972). Postulates, Principles and Rules. Accounting and Business Research: Vol. 2, No. 7, pp. 182-193.

Postulates, Principles and Rules

The Informational Value of Replacement Cost Accounting for External Company Reports

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Postulates, Principles and Rules

The Informational Value of Replacement Cost Accounting for External Company Reports