Hudson’s Bay Company (HBC), as described in Note 1 to its financial statements, is a Canadian corporation that “owns and operates department stores in Canada, United States and . . . Europe.” HBC’s financial statements for its annual period ended February 3, 2018, are at the end of this book.

Instructions

a. How much inventory does HBC have at February 3, 2018, and at January 28, 2017, and what percentage of total assets does the inventory represent? Identify the type of inventory that the company reports on its February 3, 2018 balance sheet. What else does the note on inventory, Note 9, disclose?

b. What is the company’s accounting policy for inventory? How is net realizable value determined (see Note 3 on accounting estimates)? What additional items does the company include as part of the cost of its inventory?

c. How much inventory was recognized as an expense in the year? What additional items are included in cost of sales?

d. Describe the accounting policies for revenue recognition of retail merchandise sales. Does the company expect its adoption of IFRS 15 on revenue recognition will change the amount recognized as revenue?