Faculty Scholarship 1994 - Present

Reporting Inventory: U.S. GAAP vs. IAS2

Abstract Major events have transpired during the past few years to make harmonization of world financial reporting standards a distinct possibility. An understanding of differences between U.S. GAAP and IFRS will be essential to make decisions in an international environment. This study analyzes the impact of the three major differences between IFRS and U.S. GAAP on reporting inventory, and the effect of these differences on the valuation of inventory during periods of inflation and deflation. All three differences lead to higher reported inventory value under International Accounting Standards No. 2 during periods of inflation. However, during periods of deflation, there are mixed results.