Current Asset ntroduction Analysis of Securitization For securitizations with any type of recourse, the seller must record both an asset and a compensating liability for the amount factored For securitizations without any recourse, the seller removes the receivables from the balance sheet Note disclosure of securitizations are not required-this means an analyst will be unaware of these transactions unless information about them arises from other sources such as press releases
For securitizations with any type of recourse, the seller must record both an asset and a compensating liability for the amount factored For securitizations without any recourse, the seller removes the receivables from the balance sheet Note disclosure of securitizations are not required—this means an analyst will be unaware of these transactions unless information about them arises from other sources such as press releases Current Asset Introduction Analysis of Securitization
Current Asset ntroduction Prepaid Expenses Prepaid expenses are advance payments for services or goods not yet received that extend beyond the current accounting period--examples are advance payments for rent, insurance, utilities, and property taxes Analysis of Prepaid Two analysis issues (1)For reasons of expediency, noncurrent prepaid sometimes are included among prepaid expenses classified as current--when their magnitude is large, they warrant scrutiny (2) Any substantial changes in prepaid expenses warrant scrutiny
Prepaid expenses are advance payments for services or goods not yet received that extend beyond the current accounting period—examples are advance payments for rent, insurance, utilities, and property taxes Current Asset Introduction Prepaid Expenses Two analysis issues: (1) For reasons of expediency, noncurrent prepaids sometimes are included among prepaid expenses classified as current--when their magnitude is large, they warrant scrutiny (2) Any substantial changes in prepaid expenses warrant scrutiny Analysis of Prepaids
Inventories Definitions Inventories are goods held for sale, or goods acquired (or in process of being readied) for sale, as part of a company's normal operations costs-costs are reported in the perlog od Expensing treats inventory costs like peric when incurred Capitalizing treats inventory costs like product costs-costs are capitalized as an asset and subsequently charged against future period (s)revenues benefiting from their sale
Inventories Definitions Inventories are goods held for sale, or goods acquired (or in process of being readied) for sale, as part of a company’s normal operations Expensing treats inventory costs like period costs—costs are reported in the period when incurred Capitalizing treats inventory costs like product costs—costs are capitalized as an asset and subsequently charged against future period(s)revenues benefiting from their sale
Inventories Inventory Cost Flows Beginning Net Cost Inventory of Purchases Merchandise Available for sale Ending Cost of Inventory Goods Sold
Merchandise Available for Sale Net Cost of Purchases Cost of Goods Sold Beginning Inventory Ending Inventory Inventories Inventory Cost Flows
Inventories Inventory Costing Method Use of Inventory Methods in Practice LIFO FIFO 35% 42% Other Weighted Average 19%
FIFO 42% Other 4% Weighted Average 19% LIFO 35% Use of Inventory Methods in Practice Inventories Inventory Costing Method