Sal Ternullo
AC 730: Short Research Paper
Dr. Rose
Due: 12/3/2014
For the purposes of this assignment I chose to analyze the effect of a transition to IFRS
accounting standards on Accounting Information System in organizations in the supermarket
industry. The main reason that I chose to analyze this specific industry is because the transition
from GAAP to IFRS could have significant impacts on major players in the industry who use
LIFO to account for their inventory. Another important reason that I chose to analyze the
supermarket industry is because President Obama has been drafted multiple proposals to repeal
the accounting method LIFO. The combination of the impact on the industry and the attention
that the accounting topic is currently getting in the media made it an easy topic to chose for
analysis.
One of the key differences between GAAP and IFRS is that the inventory management
method last-in, first-out (LIFO) is acceptable under GAAP while first-in, first-out (FIFO) is
required by IFRS. This difference would have a significant impact on supermarket industry
because historically 90% of grocery stores have used LIFO as their inventory management
method. This decision generally excludes items from produce, meat, or seafood considering the
nature of the product. The reason that supermarkets tend to use LIFO to manage their inventory
