Questions-600-6 Essay Example | Topics and Well Written Essays - 500 words

Questions-600-6 - Essay Example Also, both standards differ on the criteria used in derecognizing receivables in that US standard uses loss of control while the international standard combines loss of control and risk and rewards criteria’s. Recovery losses on prior impairments may be recorded by Walton under iGAAP (Barden et al, 2009). On the other hand, under US GAAP, impairment reversals are not allowed. However, the loan balance after impairment is used as the new basis for the loan. Major differences occur in the methods of valuing inventories. US GAAP allows use of LIFO (last in, First out) inventory valuation method while the international standard does not permit LIFO (Barden et al, 2009). Also, US GAAP allows the costs of spoilage and idle capacity in inventory while iGAAP does not. Lastly, iGAAP allows reversal of write downs, if any, in inventories while UA GAAP does not. 10% profit and loss test- The absolute value of the segments reportable profit loss is 10% or more of the greater of the overall reported profit of all segments reporting profits, or the absolute value of the combined reported losses of all segments reporting losses. To examine whether the reported segments are enough we will test the operating segment revenue without the intersegment sales. The threshold here is 75%. Therefore enough segments are reportable segment revenues ≠¥ 75% consolidated revenues. b) Products costs should be matched with its associated product and revenues just as it is the case of annual reporting (Barden et al, 2009). Period costs are charged to earnings when incurred among interim periods. c) Income tax in interim financial statements should be based on the effective tax rate for the entire year for ordinary earnings (Barden et al, 2009). The effective tax rate combines states and federal income tax rates such as capital gains, foreign tax rates