Determine the cost of inventory for fiscal year 2012

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Reference no: EM13852636

You should have located these statements for previous assessment problems. Use these statements and your prior knowledge of accounting, supplemented by textbooks or other references of your choosing, to answer the following questions:

1. The company must use the lower of cost or market method to account for its inventory. At the end of the fiscal year 2012, do you expect the company to write its inventory down to replacement cost or net realizable value? Explain your answer. You may need to consult an intermediate accounting textbook or an Internet source.

2. What method does the company use to determine the cost of inventory for fiscal year 2012?

3. If the company overstated ending inventory by $10 million for the fiscal year ended 2012, what would be the corrected value for income before income taxes for that year?

4. Compute the inventory turnover ratio for the fiscal year 2012. Also compute it for the fiscal year 2011. What conclusions can you make?

Reference no: EM13852636

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