Question

1. NATURE OF BUSINESS Abercrombie & Fitch Co. ("A&F"), a company incorporated in Delaware in 1996, through its subsidiaries (collectively, A&F and its subsidiaries are referred to as "Abercrombie & Fitch" or the "Company"), is a specialty retailer who primarily sells its products through store and direct-to-consumer operations, as well as through various wholesale, franchise and licensing arrangements. The Company offers a broad array of apparel products, including knit tops, woven shirts, graphic t-shirts, fleece, sweaters, jeans, woven pants, shorts, outerwear, dresses, intimates and swimwear; and personal care products and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks brands. The Company has operations in North America, Europe, Asia and the Middle East. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation The accompanying Consolidated Financial Statements include historical financial statements of, and transactions applicable to, the Company and reflect its assets, liabilities, results of operations and cash flows.

2.  Look at the section, “Summary of Significant Accounting Policies”

A.  What inventory costing method does A&F use to value its inventory?

            

B.  List the two operating segments A&F identifies for 2016:

1.

2.

C.  List the three geographic segments A&F identifies for 2016:

1.

2.

3.

D. A&F identifies its sales per quarter.

1.  Which quarter has the highest amount of sales for 2016?

2.  Why do you think this is the highest quarter for A&F?   

This question is on my study guide I found it the most difficult and just wanted to see if I got it correct so please show how you got the answer. thanks,

Answer 1

2.A. A&F uses the weighted-average cost method to value its inventory.

B. The two operating segments A&F identifies for 2016:

1. Abercrombie

2. Hollister

C. The three geographic segments A&F identifies for 2016:

1. United States

2. Europe

3. Other

D.1. Quarter with the highest amount of sales for 2016: Fourth Quarter

2. The fourth quarter could be the highest sales quarter for 2016 due to the increased sales during the festive season of Christmas and New Year’s.