Week 2 Question ACC541

1)

Chapter 9 of the online text describes the production cycle.  One component of this cycle is inventory.  Inventory is usually the largest item on a manufacturing company's balance sheet.  Many companies will track their inventory on a periodic or perpetual system.  A periodic system is one in which the company cannot really look up a part number and determine exactly how much they have on hand.  A perpetual inventory is continuously updated with each transaction that occurs.  The external auditor will often verify the inventory quantities at year end.  They will make a selection of items and make sure that their count matches the count in the computer. Has anyone ever participated in counting inventory at a workplace?

2)

Chapter 9 of the online text discusses how companies value their Inventory.  What is meant by the "lower-of-cost-or-market" valuation method?  Why is this important to a company?  

3)

Chapter 10 discusses the concept of a gain or loss on an asset.  I want to make sure I explain this in an easy way.  If you have a piece of machinery that you purchased for $5,000 20 years ago, it is most likely fully depreciated.  By this, I mean that the asset had a life of say 7 years and the 7-year period has run out and there is no book value (cost - accumulated depreciation).  If the company sells the item for $1,000 they would have to record a journal entry.  It would look like this:

 

Cash                                        $1,000

Accumulated Depreciation     $5,000

            Machinery                               $5,000

            Gain on Sale of Asset             $1,000

4)

Chapter 12 of the online text discusses Intangible Assets.  What is the difference between a patent, trademark and copyright?  How can having these items protect a company? 

5)

Chapter 12 of the online text discusses the concept of intangible assets.  A good example would be the patents and trademarks at the company I work for.  Each new design for a golf club has a patent filed.  This protects the company from other people using the idea and/or name.  A recent example is the company Apple.  They decided to name their social music networking site Ping, which is the same name as the golf clubs that the company I work for produces.  They realized that we owned the trademark and they approached the company and the companies were able to reach an agreement.  Here is a link to an article discussing how the site closed after it did not take off as they expected....

http://www.cnet.com/news/apples-ping-officially-closes-disappears-from-within-itunes/

6)

Chapter 10 I wanted to discuss a little more about how property, plant and equipment might be listed on a company's actual trial balance.  As an example, the trial balance at my workplace lists the accounts as follows:

 

Land

Buildings and Improvements

Machinery

Office Equipment

Computer Equipment

Software

Vehicles

 

These are common classifications that are used by most companies to track their assets. Can anyone think of a different classification or a unique item from their workplace or another workplace?