Essay about Course Project, Notes to Consolidated Financial Statements

Words: 1348
Pages: 6

Notes to Consolidated Financial Statements
Note 1
Business and Summary of Significant Accounting Principles (10 items)

Description of Business
The Open-Road Motorcycle Company is the largest online retailer of salvage title motorcycles. We are focused on bringing the customer the best value on entry level motorcycles by providing lower prices than our competitors. Our motorcycles are sold all over the United States, and we currently have 30 stores all across the country.

Property, Plant and Equipment
All property, plant and equipment are stated at cost and depreciated over their useful lives. All depreciation expense incurred is derived using the straight line method. We do not depreciate our land. We estimate our useful life
…show more content…
The approximate amount of the settlement is $2 million. We have determined that the contingency is probable and the amount of the settlement is accurate. This amount is stated on the consolidated balance sheet for the current period.

Note 5
Changes in Accounting Principles or Estimates
We are currently using the average cost method for inventory valuation in place of LIFO. We have determined this method is more accurate for valuation because prices tend to fluctuate and may skew net income unfavorably.

Note 6
Post Balance Sheet Events
Our company continually evaluates its motorcycle inventory to determine cost and its ability to sell. If a significant amount of inventory is deemed obsolete or “unsellable,” it is adjusted in the next period. The amount is deducted from inventory and written off as a loss. The motorcycles then become disassembled and all