Econ 3A - FAP #2

Econ 3A - FAP #2 - Bert Mouler Financial Accounting...

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Bert Mouler February 25, 2009 Financial Accounting Project #2 I. a. Apple’s accounting policy for inventories is to state them at the lower of cost, computed using the first-in, first-out method, or market. If the cost of the inventories exceeds their market value, provisions are made for the difference between the cost and the market value. Apple’s inventories consist primarily of finished goods for all periods presented. The principle that justifies carrying inventory on the balance sheet as an asset instead of expensing it when purchased is the revenue recognition principle. The principle that justifies valuing inventory at cost rather than market is the cost principle. The constraint that justifies reducing cost to market if market is lower than cost is conservatism. b. The original cost of property, plant, and equipment, net was $1,832 at the end of the last financial cycle. Accumulated depreciation for property, plant, and equipment, net is therefore $2,455 – 1,832 = $623. c.
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Econ 3A - FAP #2 - Bert Mouler Financial Accounting...

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