Client Understanding Paper
It is very important that our clients understand how we evaluate their financial and accounting information. As an accountant, I am responsible for evaluating my client’s financial paper. In this paper, I will be discussing how my client’s financial papers will be evaluated. I will do so by analyzing the following topics: adjusting lower cost of market inventory on valuation, capitalizing interest on building construction, recording gain or loss on asset disposal, and adjusting goodwill for impairment. The Financial Accounting Standard Boards (FASB) established the guidelines and the General Accepted Accounting Principles (GAAP) that should be followed when preparing and evaluating any financial and accounting statements. Adjusting lower cost of market inventory on valuation
There are different methods used to evaluate inventory. When evaluating inventory, it is best to pick a method that will work well for the company in which you are evaluating. Inventory are tangible personal property, which are held for sale in the ordinary course of business, are in the process of production for sale, or are to be consumed in the production of goods to be available for sale (Schroeder, Clark, & Cathey, 2005). According to Schroeder, Clark, and Cathey (2005) it is important to valuate inventories for two major reasons. First, inventories generally represent a major section of current assets; therefore, they have a major impact on a company’s working capital and current position. Second, inventory valuation has a major and direct impact on a company’s reported amount of net profit. The amount of inventory recorded on a company’s financial statements represents the acquisition value of an expected cost used to generate future revenues. When evaluating a company’s inventory, it is important to answer the following question: 1.
What amount of goods is on hand?
What cost flow assumption is most reasonable for the enterprise? 3.
Has the market...
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