During fiscal 2010 and 2011 MHR reported inventory writedowns. What is a write down and why was it necessary for MHR to write down some of its inventory? What were the amounts of the writedowns? Where is it reflected in the statements of income and comprehensive income? What impact do writedowns have on MHR's cash flow? Explain. What impact did the writedown have on gross margin for fiscal 2011? What journal entry would MHR have made in 2011 to record the writedown? Do you think inventory writedowns are a major problem in a business like MHR's? Explain.
Answer to relevant QuestionsExamine the operating activities section of MHR's statements of cash flows and Note 15 to the financial statements. What was MHR's cash flow from operations in 2011? Why was cash from operations so different from net income ...Describe the types of capital assets you would expect each of the following entities to have:a. Gas station b. University c. Convenience stored. Hotel e. Dairy farm f. Electric utilityg. Golf courseWhy is the selection of a depreciation method not a concern if tax minimization is the main objective of financial reporting?Explain the following bases for valuing capital assets. Provide examples of how each might provide useful information to a user:a. Historical cost b. Replacement costc. Fair value d. Value-in-use Explain how accounting policies can affect the cash from operations an entity reports when we know that different accounting policies have no effect on cash flow.
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