ACCOUNTING CHOICE: INVENTORY ACCOUNTING CHOICE ANALYSIS BEFORE AND AFTER IFRS ADOPTION

Abstract

The aim of this paper was to identify valuation inventory methods adopted by publicly traded corporations after IFRS implementation, as well to analyze the economic determinants for the choice of valuation method used. The literature review addressed the theories used in accounting choices explanation (specially the Positive Theory of Accounting and Ricardian Hypothesis), including the accounting choices regarding valuation inventory methods; and Accounting Standard CPC 16 (2009), about inventories, the result of convergence to international accounting standards. After manual search in the annual reports, it was found that almost all companies analyzed adopted the valuation inventory method of weighted average cost. In this way, it was decided to adopt the methodology of multiple case study to analyze the motivation of accounting choices for cases identified as exceptional. The results allowed that weighted average cost adoption by companies in general is consistent with the hypothesis of reducing tax burden (tax planning), observed the current economic scenario. For the only company that has adopted the FIFO method, wich belongs the chemical sector, it is observed that the positive accounting theory is not applicable and the Ricardian Principle of Comparative Advantage is the best explanation for the adoption of this accounting method differentiated. The results presented are consistent with the literature review and presents relevant background information.