LIFO to Current value:
- FIFO inventory = LIFO inventory + LIFO reserve.
- COGS (FIFO) = COGS (LIFO) – Change/increase in LIFO Reserve
- LIFO Reserve = FIFO Inventory – LIFO Inventory
Capitalization of operating leases
A finance/capital lease is reported on the balance sheet as an asset and as a liability. In the income statement, the leased asset is depreciated and interest expense is recognized. (VS operating lease: rental expense only. Nothing is recorded on B/S)
Pension and liability issue:
Funded status =fair value - PBO
Total Periodic Pension Cost =Contribution - change in Funded status
Pension cost (go throught P/L) under IFRS:
Current service cost + past service cost +interest expense (discount rate x Funded status)
Pension cost (go throught P/L) under GAAP:
Current service cost + interest expense + expected return on plan assets + actuarial G/L + amortization of Past servcie cost *
* amortization of PSC is only added under “corridor approach”.
Goodwill
GAAP only allow full goodwill which is calulated as:
Purchase price/purchased ownership % - Fair value of net assets (FV of total asset - FV of total liability)
IFRS allow full or partial goodwill. Partial is calculated as:
Purchase price - Fair value of net assets (FV of total asset - FV of total liability) x purchased ownership %
No goodwill is reported under pooling method.