ACC is a public company. Its business is largely based upon equipment distribution. ACC buys equipment...

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ACC is a public company. Its business is largely based upon equipment distribution. ACC buys equipment from a group of brand-name manufacturers it has distribution rights with and then resells the equipment to construction companies. It tracks the construction industry closely and knows approximately what the sales volume will be 12 to 18 months in advance. As such, ACC is able to effectively manage purchases and closely monitor its inventory levels. It also only works with reputable customers and, as such, has a very low incidence of uncollectible accounts. ACC also provides repair and maintenance services on the equipment it sells. Its products are high quality and, when well maintained, can perform for 10 to 20 years. Many of ACC's customers enter into service agreements from one to three years long whereby they can schedule one preventative maintenance tune-up of their equipment per year. The agreements also provide for repair if the equipment breaks down other than through abuse. Payment for the service agreements is made at the time of signing the agreement. Given the long life of the equipment, ACC maintains a very large inventory of parts. Although some may have been in stock for years, ACC contends it needs them just in case an older machine comes in for repair. ACC has an inventory tracking system that manages quantities and also generates parts aging reports for management. Parts inventory obsolescence is calculated as follows: . . 1 year old, no provision; 1-3 years old, 25% provision; 3-5 years old, 50% provision; 5-7 years old, 75% provision; Greater than 7 years old, 100% provision. ACC's policy is to carry capital assets at cost less accumulated amortization. Amortization is calculated on a straight-line basis over the estimated useful lives of the assets, as follows: Machinery and equipment 10 years Buildings 40 years Office equipment 10 years Computer equipment 5 years ACC is a public company. Its business is largely based upon equipment distribution. ACC buys equipment from a group of brand-name manufacturers it has distribution rights with and then resells the equipment to construction companies. It tracks the construction industry closely and knows approximately what the sales volume will be 12 to 18 months in advance. As such, ACC is able to effectively manage purchases and closely monitor its inventory levels. It also only works with reputable customers and, as such, has a very low incidence of uncollectible accounts. ACC also provides repair and maintenance services on the equipment it sells. Its products are high quality and, when well maintained, can perform for 10 to 20 years. Many of ACC's customers enter into service agreements from one to three years long whereby they can schedule one preventative maintenance tune-up of their equipment per year. The agreements also provide for repair if the equipment breaks down other than through abuse. Payment for the service agreements is made at the time of signing the agreement. Given the long life of the equipment, ACC maintains a very large inventory of parts. Although some may have been in stock for years, ACC contends it needs them just in case an older machine comes in for repair. ACC has an inventory tracking system that manages quantities and also generates parts aging reports for management. Parts inventory obsolescence is calculated as follows: . . 1 year old, no provision; 1-3 years old, 25% provision; 3-5 years old, 50% provision; 5-7 years old, 75% provision; Greater than 7 years old, 100% provision. ACC's policy is to carry capital assets at cost less accumulated amortization. Amortization is calculated on a straight-line basis over the estimated useful lives of the assets, as follows: Machinery and equipment 10 years Buildings 40 years Office equipment 10 years Computer equipment 5 years

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