Mitchem Lethbridge Ltd

The company’s increase in inventory (illustrated on the statement of cash flows) rose after 1970 and culminated by a drastic increase in 1973. This increase in inventory (especially in 1973) appears to be heavily financed by short-term and long-term borrowing rather than the typical accounts payable. This is a bit unusual and in 1973 (when they acquired the greatest amount of debt equity, their accounts payable decreased. Their sales were not sufficient to offset the large outflows of inventory related costs. Furthermore, Grant’s decentralization was also a cause of their financial woes because rather than corporately controlling credit extension and credit terms, they allowed each store manager to set their own policies (and manipulate them as they desired). This disastrous policy imploded in 1975 when the company had to make a $155.7 million provision for bad debt expense. So not only did the company have substantial debt and bad debt to equity ratios, they were forced to write off about 8.8% of their total sales from 1975.

Inventory Method: The inventory amount for the year ended 12/31/2016 is $14,760,000,000 which is an $759,000,000 increase from the previous year. CVS uses the lesser of the weighted average cost or market value when determining the value of inventory. Inventory is verified for accuracy by regularly doing physical counts in all locations. Between physical counts, CVS uses sales results from previous years to accrue the estimated physical loss. These estimates are determined for each individual store and warehouse separately to ensure the most accurate information possible is reported. CVS has decided to use a new method available after annual periods beginning after 12/15/2016 known as the lower of cost and net realizable value to replace using

In the past few years, they have experienced a significant increase in inventory days. Not having attractive inventory leads to a decrease in sales and an increase in discounts and write offs leading to further decreases in EBITDA Margins. In 2009, the inventory turnover took 215 days. This is significantly above Le Chateaus competitors, for example Reitman’s inventory took only 72 days (Annual Report 2010). This means it takes Le Chateaus three times as long to sell inventory compared to their competitors. To make matters worse, this trend has been exacerbated in recent years. Le Chateau’s turnover has ballooned to a staggering 341 days while Reitman’s has kept inventory turnover stable at only 76 days.

When an error of overstatement like this one happens, the financial statements have to be restated in order(ed) to bring net income to the correct amount. The Cost of goods sold should’ve been increased by $8 million and the same

Fraser, L. M., & Ormiston, A. (201). Understanding financial statements (9th ed.). Upper Saddle River, NJ: Prentice Hall.

As we have mentioned in introduction, Harvey Norman (ASX. HVN) is a giant company, business cover Australia nationally, Asia in Singapore, Malaysia and Europe- Ireland. Core business specialized in retailing & franchising, in areas of electrical, computer, furniture, entertainment, bedding goods. In this part of assignment, we aimed to find out some non-quantitative factors that might leads to potential misstatement, which eventually overstated or understated specific accounts that shown in profit and loss or balance sheet.

2. Considering your answer to item 1, the first three exhibits, and related introductory discussion, is it likely that the accounting system may distort product profit significantly? Why? (Ignore general, selling, and admin expense.)

A lone yellow stagecoach tracks across the Missouri sands, pulled by two exhausted, well groomed horses. The sharp crack of a whip is heard, and shouts of “Giddyup!” echo from the coachman. Inside, a passenger sits patiently, a stack of mail and goods beside him. A cloud of dust rises up behind the coach, and the constant motion of the wheels kicks up small rocks that fly like bullets.

Part of ABC’s Finance Director’s justification for manipulating the financial results is that: “a win-win situation for everyone”. This section will explore the impact of ABC’s creative accounting practice to the interest of different stakeholder groups. It will also identify the winners and losers if the finance director’s proposals are carried out.

There presents some positive evidence to avoid the recording of valuation allowance. First, Packer, Inc has a profitable operation history from 1995 to 1997, despite a significant loss in 1994. This is agreed by FASB, which states that a “strong earnings history coupled with evidence indicating that the loss (for example, an unusual, infrequent, or extraordinary item) is an aberration rather than a continuing condition” is a piece of positive evidence (FASB 740-10-30-22). These profits may be carried forward into the future to offset net-operating loss. Secondly, Packer may not generate any significant U.S Federal tax net operating loss carry forwards in the near future because it has the ability to utilize tax planning, such as capitalization of R&D. Thirdly, Packer has never lost deferred tax benefits due to expiration of a US net operating loss carry-forwards.

1. There were many adjustments that were made in the original balance sheet to properly record overstatements made by DHB Inc. In the current assets, one major entry that was heavily overstated was inventory. Inventory went from $47,560,000 to $38,231,000. The difference of $47,742,000 is a material due to the magnitude of the difference.

“Blake Romney became Chief Executive Officer of Peters Inc. two years ago. At the time, the company was reporting lagging profits, and Blake was brought in to "stir things up." The company has three divisions, electronics, fiber optics, and plumbing supplies. Blake has no interest in plumbing supplies, and one of the first things he did was to put pressure on his accountants to reallocate some of the company’s fixed costs away from the other two divisions to the plumbing division. This had the effect of causing the plumbing division to report losses during the last two years; in the past it had always reported low, but acceptable,

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There are two possible sources of discrepancies we would like to disclose in this introduction: financial histories and restructuring charges. The first source of some discrepancies throughout the paper is a lack of some financial history. In the 1998 Darden Restaurants Annual Report, there was some inconsistency in whether history from FY 1996 was used or not. For this reason, we have been forced to omit FY 1996 in some

In the case “Rusty and Dusty Slow Movers,” Penny is the first Controller hired at a medium-sized farm machinery company. One of her initial goals as a controller is to determine how accurately the inventory on the books reflects its fair market value. The company acquired and repossessed equipment that is hard to sell, and she noticed that there were many dusty machines when she checked inventory pallets. Ron, the inventory control clerk, informed her that most are either from overruns or the recession. Moreover, when the inventory sells, it is sold at a significant discount. Penny discussed the matter with Art, the Company President. Art told her that he believed that many of these items are sellable given appropriate marketing and the right economic conditions. He does not want to write-down the inventory because he is concerned it will negatively impact the profit. Art has indicated that she should help falsify records if it looks like auditors could discover the slow moving inventory.