Question: 3. Houston Co. has three finished products (related to


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Question: 3. Houston Co. has three finished products (related to the three different product lines) in its ending inventory at December 31, 2013. The following table provides additional information about each product. Assuming that these three products related to three different product lines, grouping would not be allowed. Houston Co. expects to incur selling costs equal to 5% of the selling price of each of the products. Product Cost RC S. Price S. Costs Normal PM X100 $220 $240 $250 10% 20% X200 $180 $160 $210 10% 20% X300 $160 $140 $190 10% 15% Total $570 We learned that, if inventory declines in value below its original cost, a company should write down the inventory to market to report the loss in both U.S. GAAP and IFRS and that the IFRS and U.S. defines the market differently. IFRS defines market as net realizable value. U.S. GAAP, on the other hand, defines market as replacement cost subject to the constraints of net realizable value (the ceiling) and net realizable value less a normal markup (the floor). IFRS does not use a ceiling or floor to determine market. Required: Determine the amount of which Houston Co. should report its inventory on the December 31, 2016 balance sheet under (a) U.S. GAAP and (2) IFRS.

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