Home Depot Non-Value-Added CostsIn the Home Depot 2009 financial statements in Appendix A...

Home Depot Non-Value-Added Costs

In the Home Depot 2009 financial statements in Appendix A at the end of this textbook, find note 1 to the financial statements. Note 1 summarizes significant accounting policies for Home Depot. Read the section in Note 1 titled “Merchandise Inventories.”

a. Identify Home Depot’s definition of “shrink.”

b. What are the causes of inventory shrink mentioned by Home Depot? Classify those causes as value-added of non-value-added.

c. What methods does Home Depot use to measure shrink?

d. How does Home Depot account for shrink?