WendyEller2-WebFieldTrip-Unit8

WendyEller2-WebFieldTrip-Unit8 - are as follows. Question...

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Class, Our professor has asked us to visit some site, and view their financial reports for some pertinent information about inventories and costs assumptions. First Company: Amazon www.amazon.com Question: How does Amazon account for its inventories? Then calculate the percentage of inventory in relation to the total assets. Answer: (A) Inventories are accounted for using the First In, First Out method, and are valued at the lower cost or market value. Total Inventory is 1200 Million. (B) Inventory only accounts for 18.5% of total assets for Amazon. (1200X100/6485=18.5%) Second Company: Dell www.dell.com Question: How does Amazon account for its inventories? Then calculate the percentage of inventory in relation to the total assets. Answer: (A) Inventories are accounted for using the First In, First Out method, and are stated at the lower cost or market value. Total Inventory is 1180 Million. (B) Inventories only account for 4.2% of total assets for Dell. (1180X100/27,561=4.2%) Our professor has also asked 2 additional questions in our discussion board. My answers
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Unformatted text preview: are as follows. Question 1: What does it mean to you when I suggest there is a difference between the cost assumption a particular company makes in valuing its inventory on the balance sheet and the physical flow of goods within the company? Answer: That a company purchases its inventory at different prices at different times for identical products. Therefore, the prices must be assumed and calculated for the balance sheet. However, the actually flow of goods may be different due to number of sales at certain prices, prices charged at different times, or sale promotions. Question 2: Does GAAP require companies to use the same inventory cost flow assumption for valuing inventory on the balance sheet as is represented by the physical flow of goods within the company? Answer: GAAP allows for 3 types of cost assumptions: First In-First Out, Last In-First Out, and an average cost of sales. Wendy Eller...
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This note was uploaded on 12/08/2009 for the course AC114 AC114 taught by Professor Duchac during the Fall '09 term at Kaplan University.

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WendyEller2-WebFieldTrip-Unit8 - are as follows. Question...

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