GAAP further provided the guideline on inventory as enshrined in ASC 330-10. Inventory methods that were allowed in relation to valuing and accounting for inventory did not permit double accounting for inventory. However, when Just for Feet books of accounts were examined, the firm frequently violated this provision by carrying out double accounting of its inventory. By the end of 1998, the firm doubled inventory value was 400 billion dollars. ASC 330-10 further provided that the value of the stock should be recorded at the lower of cost or market value. However, Just for Feet never recognized this rule and instead exploited it to use the higher value in order to boost its current assets to depict a healthier financial performance. In addition, ASC 330 required the reporting entity to disclose its obsolete inventory. Just in Time never fully adhered to this requirement. It was discovered that in the 1990s the firm had obsolete inventory of more than one million but only disclosed a value of $150,000 (Reynolds, 2011: White, 2013: US District Court, 2000). Further, in order to dodge the auditor from critically…show more content… Profits were meant to be computed based on revenues generated in that period compared to the incurred costs in that period. However, Just for Feet management violated this requirement and estimated its income from its purchased booth for the period and distributed the value over the twelve months period to account for the monthly sales values (Reynolds, 2011: White, 2013). ASC 205 further addressed the topic on asset balances. Based on this topic, the firm was expected to report asset balances of assets that do exist. However, Just for Feet presented nine million dollars in fictitious assets thus violating the accounting standards that were provided under topic
