The notes are an important part of a company's financial statements, giving valuable details that would clutter the tabular data presented in the statements. This problem will help you learn how to use a company's inventory notes. Answer the following questions:
1. Refer to Note 7, Inventories. What was the amount of the write-down of inventory as a result of the application of the lower net realizable value policy in 2014 and 2013? What is the reason for using the lower of cost or net realizable value policy?
2. Refer to the significant accounting policies for inventory on page 18 of the annual report.
a. What were the likely causes of the write-downs in inventory?
b. What is a vendor settlement accrual?