An Examination of Inventory Costing Convergence under Generally Accepted Accounting Principles and International Financial Reporting Standards

Journal of International Business Research, 2012, Forthcoming

22 Pages Posted: 19 Jul 2012

See all articles by Casey Reineking

Casey Reineking

Murray State University

Don H. Chamberlain

Murray State University - Accounting Department

Holly R. Rudolph

Murray State University - Accounting Department

Murphy Smith

Texas A&M University-Corpus Christi-Department of Accounting

Abstract

Accounting principles in the United States are converging toward international standards. If convergence continues, and there are proponents and detractors, then the U.S. system of accounting, called Generally Accepted Accounting Principles (GAAP), will eventually be replaced by International Financial Reporting Standards (IFRS). Convergence has profound implications for publicly traded companies and their many stakeholders such as investors, lenders, government agencies, and employees. A key issue facing accounting standard-setters is the treatment of inventory costing, an area in which GAAP and IFRS differ. This study addresses three research questions: What is the past and current usage of different inventory costing methods?, How important is inventory on corporate financial reports?, and What will be the impact on corporate financial reporting, specifically regarding inventory costing, if IFRS replaces GAAP? Findings show that a change from GAAP to IFRS will have a major impact on inventory costing and, as a result, on corporate financial reporting overall.

Keywords: International Financial Reporting Standards, IFRS, inventory costing, GAAP

JEL Classification: M41

Suggested Citation

Reineking, Casey and Chamberlain, Don H. and Rudolph, Holly R. and Smith, Murphy, An Examination of Inventory Costing Convergence under Generally Accepted Accounting Principles and International Financial Reporting Standards. Journal of International Business Research, 2012, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2112558

Casey Reineking

Murray State University ( email )

Murray, KY 42071-0009
United States

Don H. Chamberlain

Murray State University - Accounting Department ( email )

Murray, KY 42071-3314
United States

Holly R. Rudolph

Murray State University - Accounting Department ( email )

Murray, KY 42071-3314
United States

Murphy Smith (Contact Author)

Texas A&M University-Corpus Christi-Department of Accounting ( email )

6300 Ocean Dr
Corpus Christi, TX 78412
United States

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