By following the matching principle all of the costs associated with a particular product, not just its wholesale price, is expensed when the item is sold. Requirement 2 - A Generally, the lower of cost or market method is used to value inventory in order to “avoid reporting inventory at an amount greater than the benefits it can provide” (Spiceland, Sepe, & Nelson, 2013, p. 476). According to Spiceland, Sepe, and Nelson (2013) the “change in replacement cost usually is a good indicator of the direction of change in selling price” (p. 477). When the change in replacement cost is negative the LCM method allows companies to apply the conservatism principle. The conservatism principle involves “recognizing expenses and liabilities as soon as possible when there is uncertainty about the outcome, but to only recognize revenues and assets when they are assured of being received” (The conservatism principle).
The carrying value is $1,100 whci is greater than the claue in use which is $900. The fair market value less costs to sell is $800. The impairment is found by subtracting the carrying amount by the value in use which comes out to $200,000, which should be recognized as an impairment under the IFRS. 2. In GAAP is mandatory if a building’s book value is gretater than the undiscounted sum of assets future cash flow.
Total revenue equals price time’s quantity. It reflects total receipts obtained from selling a certain output or quantity of goods. Total costs is different it’s equal to fixed costs and variable costs. Fixed costs include building and equipment costs, regulatory fees and salaried personnel and remain stable, especially in the short term, but may vary with a longer time horizon. As the time horizon increases, variable costs rely less on existing factors and restrictions and therefore will begin behaving differently which will in turn affect the cost of production (Wright, 2007).
Question : (TCO 8) When an industry has excess capacity, market prices may drop well below their historical average. If this drop is temporary, it is called 9. Question : (TCO 8) An advantage of using budgeted costs for transfer pricing among divisions is that 10. Question
▪ Money down implies interest rate up implies investment down implies income down. ▪ Money down implies interest rate down implies investment up implies income down. 20. As a country develops economically, what changes usually take place in the goods it exports? ▪ There is little change because comparative advantage does not change.
Firstly the lease term must be greater than 75% of the asset's estimated economic life. Secondly the lease contains an option to purchase the asset for substantially less than fair market value at the end of the lease term. Lastly the present value of the lease payments is greater than 90% of the fair makers value of the asset. An example of a capital lease is a company purchasing a piece of heavy equipment that they pay in installments and purchase at the end of the lease. A direct finance lease occurs when the lessor of an asset is not the maker or dealer, but purchases the item with the intent of leasing it.
9). The rotation of perishable goods can be improved by conducting a survey and a questionnaire to the customer to indicate the needs of customer. Analyzing a turnover ratio per capital of each product will minimize the perishable rates. If a proper turnover ratio were set for the operation of buying and stocking of a product, KFF can easily expect what to expense and when to allocate the budget cutting the loss of excessive supply of the product. Specialty Shops Because KFF offers sophisticated professions such as butcher, baker, and wind steward, “payroll of these specialty positions is higher than that of the clerks and stock personnel” (KFF strategic plan, p. 9).
Planning and Measuring Performance for Costco Corporation Roger Scmidt MGT/521 February 25, 2012 Roberto Guzman Planning and Measuring Performance for Costco Corporation My week 3 Organizational Plan Assignment was the Costco Wholesale Corporation. I identified its current goals as 1) control costs by reduction of inventory and careful selection of high quality goods and services and careful expansion of its’ domestic market. To elaborate, Costco has been very successful at keeping costs down by minimizing waste and storage expenses with a rapid turnover of its’ inventory. This is at least in part due t0 its’ ability to sell high-demand goods and services for very low prices. Additionally, Costco has a goal of 3) maintaining its employee workforce, as high employee job satisfaction has translated into exceptional customer service and low employee turnover (Costco, 2012).
The quotients of variable costs will be the same at both levels. The quotients of mixed costs will be lower at the higher activity level. This is because the fixed costs are spread over a larger number of units. Cost Cost of food sold Wages and fringe benefits Fees paid delivery help Rent on building Depreciation on equipment Utilities Supplies (soap, floor wax, etc.) Administrative costs Behavior Variable Mixed Variable Fixed Fixed Mixed Mixed Fixed 1 MBA 617 Homework Solutions b.
How will a firm’s cash cycle be affected if a firm increases its inventory, all else being equal? If a firm raises or increase inventory the inventory days will increase if everything else is on keel . c. How will a firm’s cash cycle be affected if a firm begins to take the discounts offered by its suppliers, all else being equal? Also increasing cash cycle. When a firm begins to take discounts offered by suppliers accounts payable days will decrease.