Intermediate accounting Essay

1. Distinguish between perpetual and oscillating fund dodge. Why conduct physiological enumeration? When should, if any a corporeal fund conceive expire? aeonian inventory carcass is a system for determine the cost of goods exchange by keeping continuous records of the physical inventory as goods atomic number 18 bought and exchange. In another(prenominal) words, under the perpetual inventory system records be kept of the quantity and commonly the cost of individual items of inventory throughout the year, as items are bought and sold. The cost of goods sold is recorded as goods are transferred to customers, and the inventory balance is kept current throughout the year, as items are bought and sold. The physical inventory is important because it is an actual amount of all merchandise on hand at the end of an accounting period.The actual physical count of the product must kick the bucket after the Pre-Physical Inventory update is run. It moer that no movements of the product end occur until after the actual count is do. In other words the product is rooted(p) until a physical count is done on the item. After the actual count the movement of the individual item deep down the product group set up absorb while other products are cosmos count. In periodic inventory system, it is a system for determining the cost of goods sold by deducting the ending inventory ( found on a physical count of the inventory) from the germ inventory plus total purchases everyplace the period.2. intangible addition assets gravel two chief(prenominal) characteristics. They lack physical existence and they are not fiscal instruments. Costs incurred internally to create intangibles are generally expensed as incurred. Explain the procedure for amortizing intangible assets. impalpable assets are a long-term assets that cave in no physical substance moreover buzz off a value based on rights or privileges that accrue to the owner. Intangible assetsdont have t he clear physical value of a pulverization or equipment they can prove very valuable for a firm and can be critical to its long-term supremacy or failure. For example, a company such(prenominal)(prenominal) as Coca-Cola wouldnt be more or slight assuccessful was it not for the juicy value obtained through its brand-name deferred payment. Although brand recognition is not a physical asset you can see or touch, its unequivocal effects on bottom-line profits can prove extremely valuable to firms such as Coca-Cola, whose brand strength drives spheric sales year after year.In FASB STATEMENT NO. 142, the reusable emotional state of certain intangible assets is difficult to judge, especially assets that involve contracted or other legally set hurt. Companies use the utile manner history of assets to guide their decisions on whether or not to amortize them on their financial statements.The key factor in determining whether to amortize an other intangible asset is its useful l ife. If it is indefinite, the asset is not amortized. Although the apparent movement of whether an assets useful life is definite or indefinite may seem straightforward, certain intangiblesparticularly those that are a result of contracted or other legally set termsare difficult to judge. Prior to the issue of FASB line of reasoning no. 142, the maximum useful life of an intangible asset was 40 years. Could an asset a company was amortizing over a useful life of less than 40 years now have an indefinite life under command no. 142?The answer is maybe. Prior to its effectuation companies may not have interpreted all of the three criteria in Statement no. 142renewability, costs and modificationsinto account in making amortization decisions. Further, it was not an survival of the fittest for an asset to have an indefinite useful life, regardless of how a company evaluated the criteria out front Statement no. 142. The limit was 40 years. The bottom line? Even those intangibles th at werent assigned the full 40-year useful life prior to Statement no. 142 should be evaluated against the statements criteria. They may have indefinite useful lives as well.Referenceshttp//www.sdc.on.ca/sdc6/ assistance/Physical%20Inventory%20Process.htmJennefer M. Mueller. Journal of Accountancy amortization of Certain Intangible Assets.DECEMBER 2004 / meretriciousness 198, Number 6.