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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Research and Analysis Using the Annual Report

Obtain Wal-Mart’s 2016 annual report either through the "Investor Relations" portion of its website (do a web search for Wal-Mart investor relations) or go to www.sec.gov and click "Company Filings Search" under "Filings."

Required:

Does Wal-Mart use the lower of cost or market method to account for its inventory? Does it appear that Wal-Mart will write down its inventory to market value?

To determine

Introduction:

Inventory is also regarded as the stock of the firm. It is produced by the company with a purchase to sale. The end product of business operations is referred to inventory.

If W-M uses ‘lower of cost or market’ method and markdown the inventory value at market value.

Explanation

As per the data, W-M used use the lower of cost or market method which is determined by LIFO (Last in first out) inventory valuation method.

Inventory valuation method is used to evaluate the various parts of inventory like ending inventory, cost of goods sold, cost of goods available for sale etc.

There are three methods of inventory valuation:

  1. LIFO (Last in first out): In LIFO inventory system, the company records the sale of goods which are recently purchased...

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