Jeffers Company purchased inventory for $10,000. The current cost to replace the inventory is $9,300. The company estimates it can sell the inventory for $9,700 but will have to spend $300 to complete the inventory. The company's normal profit margin is 12%.
a) How much would the company need to write down the inventory assuming it follows i) IFRS ii) US GAAP?
b) Assume that next period the selling price increases to $9,900, the replacement cost increases to $9,500 and the estimated cost to complete remains $300. How would the company reverse the prior write down using
i) IFRS ii) US GAAP?