Explain the various methods employed by companies to manipulate the valuation of inventory. Where appropriate provide relevant examples.
The companies can use various methods to manipulate the valuation of inventory:
FOR EXAMPLE: I am currently having stock of 50 units of cakes, i feel that due to great demand for cakes, i can also sell cakes at an increase the price without losing on the demand.
So, if i had value my inventory at (50 * 500) = $25,000
I can now value my inventory at (50* $700 ) = $35,000
Due, to the higher costs per unit of inventory i can value my inventory at a higher amount.
For example: in the above problem, if we increase the number of units to 70 fro 50 we can increase our inventory valuations to $35,000 from $25,000.By reporting fake numbers, the company was successful in overstating inventory valuations.
Explain the various methods employed by companies to manipulate the valuation of inventory. Where appropriate provide...
Explain the various methods employed by companies to manipulate the valuation of inventory. Where appropriate provide relevant examples.
1) What is the purpose of inventory valuation methods? 2) What are the four inventory valuation methods a company can use? 3) What inventory method is best used with many items with similar costs? 4) What inventory method will provide the highest net income when prices are rising? 4) What inventory method could help a company reduce its corporate income taxes? 5) What is inventory turnover and how is it measured?
Under GAAP, companies may apply various valuation methods in recording transactions and preparing financial statements, for example historical cost, fair market, replacement, depreciated or amortized cost, etc. For each basis in your discussion, cover its definition, describe in general terms when it is proper to use it, and critique the advantages and disadvantages of its use. Address the issue of why we should (or should not) use so many different valuation bases in GAAP. Is it accurate to claim that...
Under GAAP, companies may apply various valuation methods in recording transactions and preparing financial statements, for example historical cost, fair market, replacement, depreciated or amortized cost, etc. For each basis in your discussion, cover its definition, describe in general terms when it is proper to use it, and critique the advantages and disadvantages of its use. Address the issue of why we should (or should not) use so many different valuation bases in GAAP. Is it accurate to claim that...
Exercise 17.1 Using the various costing methods of inventory valuation. LO 17-1 Information about Vinzant Company's inventory of one item follows. Number of eBook Explanation Units 165 Unit Cost Beginning inventory, January 1 Purchases: April August October Ending inventory, December 31 $300 eterences 205 305 225 310 175 165 312 1. Compute the cost of the ending inventory under the average cost method. 2. Compute the cost of the ending inventory under the FIFO method. 3. Compute the cost of...
Provide real world examples and explain: strong culture companies weak culture companies
Companies have various methods to raise capital and have to make decisions on the best method to do so. These methods include common stock and preferred stock. Your company has been performing well and the stock prices have been increasing. The Board of Directors are looking to reduce the price of the stock. Determine the best method to meet this objective, supporting your decision with real life examples. How will your decision affect the statement of cash flows?
Companies have various methods to raise capital and have to make decisions on the best method to do so. These methods include common stock and preferred stock. Your company has been performing well and the stock prices have been increasing. The Board of Directors are looking to reduce the price of the stock. Determine the best method to meet this objective, supporting your decision with real life examples. How will your decision affect the statement of cash flows?
Companies have various methods to raise capital and have to make decisions on the best method to do so. These methods include common stock and preferred stock. Your company has been performing well and the stock prices have been increasing. The Board of Directors are looking to reduce the price of the stock. Determine the best method to meet this objective, supporting your decision with real life examples. How will your decision affect the statement of cash flows?
Explain the three inventory control models and the driving factor in each model. Provide examples for each one using current companies.