Accounting For Merchandising Organizations Db

First of all , we ought to state that all companies argon next the prudence concept , which is an important accounting principle , by writing off extend to the lower of follow or net realizable cherish . The prudence concept states that provisional profits can non be reflected in the accounts until they are cognize . thusly if the net realizable of stock is lower than cost consequently the stock mensurate should be write pass to its single book value . Organizations that work in the technical manufacture , like Nortel Networks , normally face the issue of ancient stock . The rapid technological advancements that are taking send out are diminishing the live of stock . As briefly as a new product with better capabilities is issued , the foregoing goods of the same category are no longer demanded . For pillow sl ip , as soon as the Pentium 4 was issued , the demand for Pentium 3 rock-bottom steadily and drastically . Due to such(prenominal)(prenominal) feature , Nortel Networks ordinarily ends up with old stock that will non be sold since there is no longer demand for such product . These companies are required to write off the value of the stock in line with the prudence concept in to portray its true net realizable valueIf stock that is written down is eventually sold , such transaction should be reflected in the accounts . As regards Micron Technology they are non portraying all the respective minutes if they will not record the sale . However , before taking some(prenominal) drastic actions , one should consider the materiality of such minutes . If they are not material , they are therefore not significant and will not alter the decision of either external users if shown . Indeed Micron Technology has probably disposed(predicate) an accounting policy concerning such sto ck , which describes their methodReferenceHe! ndriksen S . E Van Breda F . M (1992 . invoice Theory . no. Edition . New York : Irwin McGraw-Hill Companies IncorporationWood F Sangster A (2002 . Business report 1 . Ninth Edition London : Prentice HallPAGEPAGE 1...If you taking into custody to get a full essay, order it on our website: OrderCustomPaper.com

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