FRA-Inventories and Long Lived assets

Hi,

I am working on inventories and long-lived assets and keep on mixing the different treatments by IFRS and US GAAP. What’s the best way to remember how the inventories and long-lived assets are treated under IFRS and US GAAP? I understand IFRS uses a principle approach whereas US GAAP is a more rule-based approach.

Don’t try to memorize , Just understand

for example , In inventory IFRS prohibit using LIFO cost flow assumption while it’s allowed in US GAAP

In PPE , IFRS has revaluation model for subsequent measurement while US GAAP only has cost model .

how would you understand them? If I take your mentioned above examples, in the curriculum, it doesn’t give reasons why IFRS prohibits using LIFO and why US GAAP allows only cost model! Or

A company has two types of long-lived assets: land and machinery. The company prepares financial statements as per IFRS, which allows the company to use:

A. The cost model for land and revaluation model for machinery.

B. Only the revaluation model for both land and machinery.

C. Only the evaluation model for land and the cost model for machinery.
The answer is A. I believe it should be B. Anyone please?

Land can only be accounted for @ cost unless it’s an investment property?

PPE can either be on cost or on revaluation model so option A is right

Thankyou for answering :v:

LIFO is prohibited under IFRS because it can distort net income (higher or lower depending on price trend) whereas FIFO follows the natural flow of costs (i.e. in the order purchased/paid). It is also subject to management overstating profits by deliberately liquidating inventories (older lower costs).

“US GAAP only cost model” is a wrong statement. LIFO/FIFO are cost flows (called cost formulas under IFRS). Inventories are valued at lower of cost and NRV (FIFO/average) as well as lower of cost and market (LIFO/retail method). US GAAP did not use LCNRV to LIFO because of cost of implementation by firms.