Question

All of the following are key similarities between GAAP and IFRS with respect to accounting for inventories except: (a) costs to include in inventories are similar. (b) LIFO cost flow assumption where appropriate is used by both sets of standards. (c) fair value valuation of inventories is prohibited by both sets of standards. (d) guidelines on ownership of goods are similar

Short answer

The correct option is “b.”

Step-by-step solution

LIFO cost flow assumption

(b) LIFO cost assumption is permitted by the GAAP but is prohibited under IFRS.

Explanation of wrong options

(a) Under GAAP and IFRS, the costs included in the inventories are the same.

(c) Both GAAP and IFRS prohibit the fair value valuation method.

(d) Guidelines of ownership are similar under both.

Thus, the correct option is the second one.