Inventory Valuation Palermo Wine Company Your name University The Chief Financial Officer 1st June 2010 The Auditors Dear Sirs, Re: Inventory Valuation This letter serves to justify the position of Palermo Wine Company to maintain the value of its inventory in its account at 31st May 2010…
According to generally accepted accounting principles (GAAPs) there are three acceptable methods of valuation. These include average cost (AVCO) and First-in-first-out (FIFO) and last-in-first-out (LIFO). However, International Accounting Standards (IAS) 2 does not permit the use of LIFO (BPP 2009, p.205). The method that we have adopted is AVCO. GAAPs and IAS 2 also require that inventory be valued at the lower-of-cost-and-market value (LCM) (Hoyle and Skender 2010). This means that if the market value had fallen below cost after the year end then the inventory would require an adjustment to market value. We therefore need to compare our valuation at 31st May 2010 which is $120 with the current market price of $146. Since Palermo’s valuation is lower then the market value, we will maintain our current valuation of $120 per case. As soon as we start paying $80 per case, the average cost will decline as long as cost prices remain that way. This however, will not apply to 31st May 2010. Furthermore, if later on, we see a reduction in market value below our current average cost of $120, we will have no other choice but to reduce our valuation to market value and to write off as an expense. Otherwise, our valuation as it stands currently is in keeping with GAAPs and IASs. Sincerely, …………………………. Chief Financial Officer References BPP. (2009). ...
Cite this document
(“Incentory Valuation Case Study Example | Topics and Well Written Essays - 250 words”, n.d.)
Retrieved from https://studentshare.net/other/25931-incentory-valuation
(Incentory Valuation Case Study Example | Topics and Well Written Essays - 250 Words)
“Incentory Valuation Case Study Example | Topics and Well Written Essays - 250 Words”, n.d. https://studentshare.net/other/25931-incentory-valuation.
The supply of leather in 1989 was very stable with a forecast of 3% growth for 1990. The demand for leather apparel products in 1989 was expected to reach a market growth of 3.5% and in 1990 the forecasted growth was 4%. G-III between 1985 and 1989 achieved a compounded growth rate of 68% (Yale).
Hazel Khan bought a residential flat in Mansion House subject to a mortgage from Southwark Council. The purchase price of the property was estimated to be 47,500 and the amount of the mortgage was 17,500. Before approving the mortgage, the Council instructed Sam to inspect the property and prepare a report on it.
Following are the formula.
Above the problem shows comparing the effective annual rates and future required payment of the two notes. In the case of Pru-Johntower Life Insurance Company, EAR is 3.797 and FV is 719550000. And the case
Valuation models including DCF and EVA will made applied using company’s financial information and some market ratios.
Coca-Cola Corporation (or “CC”) is one the leading brands of the world that offers non-alcoholic beverages. The company is an
The other factor that leads to the profitability is the good advertising skills. The jokes that are involved in the phone calls are appealing to the customers and that makes them to become brand loyal. The valuation will
eam of dividends during the high growth phase, which grows at gs (the short-term growth rate) and the present value of the dividend stream growing in perpetuity at gL (the long-term growth rate)
Ragan’s current P/E of 7.21x compared to the Industry P/E of 12.27x indicates
Therefore, it can be concluded that there is a reasonable level of correlation between the market value figure obtained from per share valuation and that which results from the enterprise value valuation. This idealization is based on the fact that the slight difference
1 Pages(250 words)Case Study
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Case Study on topic Incentory Valuation for FREE!