Whicher Corporation had three products in its ending inventory at December 31, 2007. Whicher Corporation considers a profit margin of 15% of the sales price average for product 1 and a profit margin of 10% of the sales price average for products 2 and 3. When Whicher Corporation sells its products, it expects to incur selling costs equal to 5% of the selling price. The chart below gives further information about each product:
Cost Replacement cost Selling
price
Product 1 $150 $160 $180
Product 2 $180 $155 $160
Product 3 $120 $100 $120
a. What is the amount of write-down (if any) required using US GAAP? Calculate the write-down on a total inventory basis.
b. What is the amount of write-down (if any) required using IFRS? Calculate the write-down on a total inventory basis.