Toys 'R Us And Babies'

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Toys “R” Us is one of the leading companies that provides toys, video games, dolls, action figures, learning games, building blocks, and many other toys that a kid can ever dream of. It is considered to be an American toy store which was founded and headquartered in Wayne, New Jersey back in 1948. This company now has over 866 Toys “R” Us and Babies “R” Us stores in the United States and Puerto Rico, and 750 international stores and over 245 licensed stores in 37 countries. With all toys that each Toys “R” Us stores has in store, the company developed a strategy to depreciate its assets. For this reason, the following mini case study will demonstrate its depreciation methods that the company has developed.
The founder of Toys “R” Us, Charles P. Lazarus, was born on October 4th in Washington, D.C. Growing up, he witnessed his father operate a bicycle shop which inspired him to think and dream about ways to grow the
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The way that they record depreciation and amortization is by using the straight-line method over the shorter of the estimated useful lives of their assets or the terms of the respective leases. As we have learned, straight-line method is one of the types of ways that a company can depreciate their assets. This method considers depreciation as a “function of time rather than a function of usage.” Because this method is known to be one of the simplest, many companies often use it, including Toys “R” Us. The straight-line procedure is also often considered to be the most conceptually appropriate. The straight-line method often results in a major objection because it rests on two tenuous assumptions. The two include: The asset's economic usefulness is the same each year, and the maintenance and repair expense is essentially the same each period. Another problem that arises from using the straight-line method is that distortions in the rate of return analysis (income/assets)
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