Question: On September 30, 2017, Germany-based Ceconomy (which owns consumer electronics retailer MediaMarktSaturn) reported in its annual financial statements that it held inventories for 52 days'

On September 30, 2017, Germany-based Ceconomy (which owns consumer electronics

retailer MediaMarktSaturn) reported in its annual financial statements that it held

inventories for 52 days' sales. The inventories had a book value of 2,553 million.

Ceconomy's statutory tax rate was 30.5 percent.

a. How much excess inventory do you estimate Ceconomy is holding in September 2017

if the firm's optimal Days' Inventories is 45 days?

b. Calculate the inventory impairment charge for Ceconomy if 50 percent of this excess

inventory is deemed worthless. Record the changes Ceconomy's financial statements

from adjusting for this impairment.

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