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Intermediate Accounting: Reporting...
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Intermediate Accounting: Reporting...
Fenimore Manufacturing Company uses the average cost method. It has followed a policy of expensing all its manufacturing cost variances. It is considering a change in its policy that will involve allocating them between cost of goods sold and inventory. Fenimore’s president has asked you which of these alternative policies is consistent with GAAP.
Directions
Research the related generally accepted accounting principles and prepare a short memo to the president. Cite your references and applicable paragraph numbers.
Draft a memo with a research on the GAAP along with the references.
Memo
From
AB
To
The President,
Company FM.
April 16, 2019
Sub: GAAP for inventory
Dear Sir\Mam,
The valuation of the inventory plays a vital role for every company. This must however to be compliant with GAAP, the FASB ASC 330-10-30, needs to be adhered. In this principle, the inventory is valued at a standard cost which are frequently altered to approximate the market costs. Thus, the balance sheet prepared shall result in a near market inventory value...
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