Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 10, Problem 1SSC
To determine
To prepare: The memo to explain the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Assume that Distributor Company Inc. has the following inventory item on hand at December 31, 2018:Historical cost : $1,000Replacement cost: $900Estimated Selling price: $ 1,050Estimated costs to complete and sell: $100Required: Write down the journal entry at end of 20181) Follow IFRS2) Follow U.S GAAP
528492module item id-4943272
Bi
Directions
Before beginning the discussion, compute for each year Costco's:
• gross margin percentage (carry to one decimal point).
• return on assets percentage (carry to one decimal point).
. inventory turnover ratio, and
• average days to sell inventory.
(Later provide your calculations when responding to a discussion question.)
Costco Wholesale Corporation operated 787 stores as of September 1, 2019. The following data were
taken from the company's annual report. All dollar amounts are in millions.
Fiscal Year Ending
Fiscal Years
UNCLASSIFIED
W
Net sales
O
Cost of
goods sold
Net income
Merchandise
inventory
Lan Cartaale tquentami
12/31/2019
$ 152,903
132,886
hp
3,659
11.395
12/31/2018
$141,576
Discussion Questions
1. Based on Costco's gross margin and return on sales percentages, did its performance improve in 2019?
Explain
123,152
3,134
11,040
XYZ Company's policy for the purchases of any
asset over the value of $3,000 requires the
purchasing clerk and purchasing manager to
sign off is an example of
а.
general authorization.
b.
special authorization.
С.
specific authorization.
d.
generic authorization.
Chapter 10 Solutions
Intermediate Accounting
Ch. 10 - How is inventory tracked under a perpetual...Ch. 10 - Barbara Wight is Chief Financial Officer at Taylor...Ch. 10 - What costs should be included in the unit cost of...Ch. 10 - When does the inventory allocation problem arise?Ch. 10 - Explain the difference between the FIFO method of...Ch. 10 - Which method of inventory results in an inventory...Ch. 10 - If unit costs are rising and inventory levels are...Ch. 10 - How can financial statements be converted from the...Ch. 10 - Explain the unit of measure under the dollar-value...Ch. 10 - What do firms use as the market value when...
Ch. 10 - Do U.S. GAAP and IFRS treat inventory write-downs...Ch. 10 - Under IFRS, how do firms determine...Ch. 10 - How does the conventional retail method...Ch. 10 - Why would a company use the gross profit method to...Ch. 10 - How are required LIFO disclosures used to compute...Ch. 10 - How does a company build LIFO layers under the...Ch. 10 - Giddens Company adopted the dollar-value UFO...Ch. 10 - The Loyd Company lad 150 units of product Omega on...Ch. 10 - Simmons, Inc. uses the lower-of-cost-or-market...Ch. 10 - Simmons, Inc. uses the lower-of-cost-or-market...Ch. 10 - The Loyd Company had 150 units of product Omega on...Ch. 10 - The Loyd Company had 150 units of product Omega on...Ch. 10 - On March 1, Year 1, LuxWear me had beginning...Ch. 10 - Prob. 10.1BECh. 10 - Prob. 10.2BECh. 10 - Prob. 10.3BECh. 10 - Prob. 10.4BECh. 10 - FIFO, Perpetual Basis. Spider incorporated...Ch. 10 - LIFO, Perpetual Basis. Using the information...Ch. 10 - Prob. 10.7BECh. 10 - LIFO Reserve. Best Stores is considering a change...Ch. 10 - LIFO. Perpetual Basis. Source Enterprises reports...Ch. 10 - LIFO Liquidation. Using the information provided...Ch. 10 - Prob. 10.11BECh. 10 - Dollar-Value LIFO, Conversion to FIFO. Using the...Ch. 10 - Lower of Cost or Market. Count Clothing Company...Ch. 10 - Lower of Cost or Market. Using the information in...Ch. 10 - Lower of Cost or Market, IFRS. Using the...Ch. 10 - Prob. 10.16BECh. 10 - Prob. 10.17BECh. 10 - Lower of Cost or Market. Sarat Boot Company...Ch. 10 - Prob. 10.19BECh. 10 - Prob. 10.20BECh. 10 - Prob. 10.21BECh. 10 - Gross Profit Method. Sammi Company needs to...Ch. 10 - Prob. 10.23BECh. 10 - LIFO Retail Inventory Method. Complete the...Ch. 10 - LIFO Retail Inventory Method. Complete the...Ch. 10 - Moving Average, FIFO, LIFO. Arthur Lloyd...Ch. 10 - Moving Average, FIFO, LIFO, Presentation, and...Ch. 10 - Moving Average, FIFO, LIFO. Zoola, Inc. provided...Ch. 10 - Prob. 10.4ECh. 10 - LIFO, Conversion to FIFO. Inventory transactions...Ch. 10 - LIFO. Burke Company uses the LIFO perpetual method...Ch. 10 - Prob. 10.7ECh. 10 - Prob. 10.8ECh. 10 - Prob. 10.9ECh. 10 - Prob. 10.10ECh. 10 - Lower of Cost or Market. All-Kinds-of-Cases...Ch. 10 - Prob. 10.12ECh. 10 - Lower of Cost or Market. Printmaster Distributors...Ch. 10 - Prob. 10.14ECh. 10 - Prob. 10.15ECh. 10 - Conventional Retail Inventory Method. Melvin...Ch. 10 - Gross Profit Method. A tsunami destroyed Kyoto...Ch. 10 - Prob. 10.18ECh. 10 - Prob. 10.19ECh. 10 - Prob. 10.20ECh. 10 - Dollar-Value LIFO Retail Inventory Method....Ch. 10 - Moving Average, FIFO, LIFO. Morocco Imports...Ch. 10 - Prob. 10.2PCh. 10 - Prob. 10.3PCh. 10 - Prob. 10.4PCh. 10 - Prob. 10.5PCh. 10 - Prob. 10.6PCh. 10 - Dollar-Value LIFO. LIFO Liquidation. Silvio's...Ch. 10 - Lower of Cost or Market. Framingdale Factories....Ch. 10 - Lower of Cost or Market. O'Sullivan Corporation...Ch. 10 - Conventional Retail Inventory Method. John Stevens...Ch. 10 - Prob. 10.11PCh. 10 - Prob. 10.12PCh. 10 - Basic Retail Inventory Method and Conventional...Ch. 10 - Basic Retail Inventory Method and Conventional...Ch. 10 - Prob. 10.15PCh. 10 - Conventional Retail Inventory Method, Lower of...Ch. 10 - Prob. 1JCCh. 10 - Judgment Case 2: Inventory Costing BBS is a...Ch. 10 - Prob. 3JCCh. 10 - Prob. 1FSCCh. 10 - Prob. 2FSCCh. 10 - Prob. 1SSCCh. 10 - Prob. 2SSCCh. 10 - Surfing the Standards Case 3: Time Shares Treasure...Ch. 10 - Surfing the Standards Case 4: Lower of Cost or...Ch. 10 - Prob. 1BCCCh. 10 - Basis for Conclusions Case 2: The Lower of Cost or...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following statements regarding the accounting treatment of agriculture is true? Question 25 options: a) Each biological asset must be measured individually under IFRS. b) Once agricultural produce is harvested and is initially measured, it becomes property, plant, and equipment accounted for under IAS 16. c) Under ASPE, a new standard specific to agriculture is effective for fiscal periods beginning on or after January 1, 2022. d) When measuring biological assets or agricultural produce under IFRS, fair value is considered the fair value when the asset is ready to be sold, not in its current condition.arrow_forwardEffects of FIFO and LIFO Sheepskin Company sells to colleges and universities a special paper that is used for diplomas. Sheepskin typically makes one purchase of the special paper each year on January 1. Assume that Sheepskin uses a perpetual inventory system. You have the following data for the 3 years ending in 2019: Required: 1. What would the ending inventory and cost of goods sold be for each year if FIFO is used? 2. What would the ending inventory and cost of goods sold be for each year if LIFO is used? 3. CONCEPTUAL CONNECTION For each year, explain the cause of the differences in cost of goods sold under FIFO and LIFO.arrow_forwardFor the year ended 31/12/2020, the financial statements of ABC Company were authorized for issue on 31/3/2021. On 31/12/2020, ABC reported inventory in its Balance Sheet at NRV ($7000) since the cost was $10000. On 17/2/2021, ABC entered into an agreement to sell the entire inventory to a customer for $7700 (immaterial) How should IAS 10 account for this event? Select one: a. Disclosure in the notes b. Accounts receivable Sales revenue C. NO Action d. Inventory Cost of goods sold e. All answers are false f. Loss on Inventory write-down Inventory g. Inventory 7700 h. Cost of goods sold Inventory 700 2300 700 Gain on reversal of Inventory write- down 2300 7700 700 2300 700 2300arrow_forward
- The statement of financial position for Aminah Kaya Berhad together with relevant notes are given below. Aminah Kaya Berhad produces crockery for sale to shops and through its online platform. Aminah Kaya Berhad Statement of Financial Position as at 30 June 2020 and 30 June 2021 2021 RM'000 2020 RM'000 ASSET Non-Current Assets Trademarks 100 120 10,200 10,300 8,600 8,720 Property Plant & equipment Current Asset 1000 1,100 1,550 Inventories Trade and other receivables 1,800 Cash and Cash Equivalent 200 310 3,000 2.960 TOTAL ASSET 13.300 11.680 LIABILITIES Current Liabilities Trade and other payables Current tax liability 1,200 1,000 250 300 1.500 1.250 Non-Current Liabilities Long Term Borrowings 3,200 2,600 TOTAL LIABILITIES 4,700 3,850 EQUITY Share Capital Retained Earnings Total Equity 3,500 5,100 8.600 2,950 4,880 7.830 TOTAL EQUITY AND 13,300 11.680 LIABILITIES During the year to 30 June 2021: 1. Aminah Kaya Berhad paid RM2,500,000 for a new property, plant and equipment. 2.…arrow_forwardRequlred Information [The following informetion applies to the questions dlisplayed below) Grant Enterprises and Lee Corporation report the following smounts for the year Grant $ 38,800 24,0 355,280 21,8ae Lee $ 56,00 Inventory (beginning) Inventory (ending) Purchases 185,8aa Purchase returns Requlred: 1. Calculate cost of goods sold for esch compeny Grant Lee Boginning inventory Cost of goods available for sale Cost of goods soldarrow_forwardAir France–KLM (AF), a Franco-Dutch company, prepares its financial statements according to International Financial Reporting Standards. AF’s financial statements and disclosure notes for the year ended December 31, 2013, are provided with all new textbooks. This material also is available at www.airfranceklm-finance.com . Required: What method does the company use to value its inventory? What other alternatives are available under IFRS? Under U.S. GAAP?arrow_forward
- photo_2022-03-03_08-37-34 (2).jpgfile_uploadAdd Image photo_2022-03-03_08-37-34 (2).jpgfile_uploadAdd Image close close What is the Inventory turnover, Age of inventory, asset turnover (2 years), and Fixed asset turnover (2 years)arrow_forwardReview the new revenue recognition guidance issued by the Financial Accounting Standards Board http://www.fasb.org/jsp/FASB/Page/ImageBridgePagecid=1176169257359 and answer the following questions. What is the new standard as of ASC 606? What does that mean to you? What are the recommended steps companies should follow to achieve the core principle? How does this change current GAAP standards? Who is required to adhere to this new standard?arrow_forwardCurrent Attempt in Progress Crane Electronics uses a perpetual inventory system which, at the company's year-end December 31, 2023, indicated an inventory value of $1,035,750. A physical inventory count was conducted and it was determined that the inventory value was $995,675. Prepare the journal entry to record the difference between the perpetual inventory record and the physical inventory count. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry* for the account titles and enter O for the amounts. List debit entry before credit entry.) Account Titles and Explanation Debit Credit inv Inventory Over and Shortarrow_forward
- Chapter : Inventory San Corp. conducts an assessment of the inventory held at the end of 2022. The person in charge of the San Corp. warehouse reports some information from inventory, namely from inventory Q, R, and S The cost used to sell each inventory is $30,000 Instructions: Prepare the journal entries necessary to recognize an impairment loss on inventories, if the company uses: a. cost methodarrow_forwardThe following are selected 2025 transactions of Whispering Corporation. Sept. 1 Oct. 1 Oct. 1 (a) Purchased inventory from Encino Company on account for $39,000. Whispering records purchases gross and uses a periodic inventory system. Issued a $39,000, 12-month, 8% note to Encino in payment of account. Borrowed $39,000 from the Shore Bank by signing a 12-month, zero-interest-bearing $42,120 note. Prepare journal entries for the selected transactions above. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record entries in the order displayed in the problem statement. List all debit entries before credit entries.) Date Account Titles and Explanation Debit Creditarrow_forwardVisit www.sec.gov/edgar and search for the BJ's Wholesale annual report (10-K) for the year ended February 1, 2020, using EDGAR (Electronic Data Gathering, Analysis, and Retrieval system). Search or scroll within the annual report to find the balance sheet, labeled "Consolidated Balance Sheets." Required: 1. Find the amounts reported for accumulated depreciation for the period ended February 1, 2020, and February 2, 2019. Assuming no depreciable assets were sold during the year, determine the adjustment for BJ's depreciation for the year and compute the adjusted balances of the related accounts. 2. For simplicity, assume the entire amount reported for "Prepaid expenses and other current assets" represents the balance of the Supplies account. If the year-end balance of the Supplies account prior to any adjustment is $200,000 (in thousands), determine the adjustment that was made to Supplies (and Supplies Expense) at the end of the current year and compute the adjusted balances of the…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Chapter 6 Merchandise Inventory; Author: Vicki Stewart;https://www.youtube.com/watch?v=DnrcQLD2yKU;License: Standard YouTube License, CC-BY
Accounting for Merchandising Operations Recording Purchases of Merchandise; Author: Socrat Ghadban;https://www.youtube.com/watch?v=iQp5UoYpG20;License: Standard Youtube License