Selling and general administrative costs are not included in valuing inventory. Tesla Motors uses the standard cost method to value inventories while Coda Automotive uses the retail method to value its inventory. There are key differences on the methods used in inventory costing. In Tesla Motors, the last in first out method (LIFO) is used to establish the total cost of inventory for the period. In Coda Automotive, inventories are priced at net realizable cost. Pricing inventories at their net realizable costs under the IFRS indicate that inventories can be written-down.
This is not the case for the U. S GAAP standard; inventories cannot be written-down under any circumstances. Both companies depreciate their fixed assets. The U. S GAAP and the IFRS recognize the importance of presenting truthful information to the auditors. It would not be realistic for one standard to value long-term assets at their original value. Long-terms assets are depreciated over their entire life span to indicate their true value at the period of financial reporting. Under this category, some variation is noted on how property plant and equipment (PPE) is valued.
Although both companies have depreciated their property plant and equipment, different principals are applied. Tesla values its PPE using the historic cost principal. This means that, revaluation of PPE and other long term assets is not allowed under the U. S GAAP. Coda Automotive, however, revalues its PPE at the year end. This revaluation is made after an increase in the market cost for the PPE on 6th March 2013. Depreciation is then recalculated from that period. The IFRS allows fixed assets to be re-valued at the end of the financial year if there is a material change in the market cost.
The appropriate depreciation must match the revaluation of the asset; as it is seen from Coda Automotive statement of financial position. Another significant item that differentiates the two standards as used by the two companies is the presentation of gifts and donations. These are material gains that are independent of the companies’ continuing operations. In Tesla Motors, gifts and donations are indicated in the notes below the financial statements. Coda Automotive, which employs the IFRS standard, presents the gifts and donations with the other revenues from the company’s operations.
Some differences are noted in the layout of different financial statements between the two companies. Titles also differ for the respective financial statements.
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