Intermediate accounting Essay

1. Distinguish between ageless and periodic memorial organization. why conduct somatogenic inventory? When should, if any a physical inventory count drop dead?Perpetual inventory system is a system for determine the monetary hold dear of goods exchange by keeping continuous records of the physical inventory as goods be bought and sold. In former(a) haggle, under the perpetual inventory system records argon kept of the quantity and usu eithery the cost of individual items of inventory through with(predicate)out the year, as items argon bought and sold. The cost of goods sold is recorded as goods are transferred to customers, and the inventory balance is kept underway throughout the year, as items are bought and sold. The physical inventory is important because it is an developed amount of all merchandise on hand at the discontinue of an accounting period.The actual physical count of the product must occur after the Pre-Physical Inventory update is run. It means that nary (prenominal)movements of the product backside occur until after the actual count is done. In other words the product is frozen until a physical count is done on the item. After the actual count the movement of the individual item at heart the product group asshole resume while other products are being count. In periodic inventory system, it is a system for determining the cost of goods sold by deducting the ending inventory (based on a physical count of the inventory) from the beginning inventory plus total purchases everyplace the period.2. impalpable assets have two main characteristics. They lack physical humans and they are not financial instruments. Costs incurred internally to create intangibles are generally expensed as incurred. Explain the procedure for amortizing intangible assets.Intangible assets are a long-term assets that have no physical substance unless have a value based on rights or privileges that diminish to the owner. Intangible assetsdont have the obvi ous physical value of afactory or equipment they drop prove very expensive for a firm and can be critical to its long-term succeeder or failure. For example, a company such as Coca-Cola wouldnt be nearly assuccessful was it not for the high value obtained through its brand-name recognition. Although brand recognition is not a physical asset you can see or touch, its positive effects on bottom-line profits can prove extremely valuable to firms such as Coca-Cola, whose brand military posture drives global sales year after year.In FASB STATEMENT nary(prenominal) 142, the helpful livelihood of certain intangible assets is toilsome to judge, particularly assets that imply assure or other legally set terms. Companies use the useful life 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 life. If it is undefined, the asset is not amortized. A lthough the question of whether an assets useful life is definite or indefinite whitethorn seem straightforward, certain intangiblesparticularly those that are a result of contracted or other legally set termsare difficult to judge. Prior to the issuance of FASB Statement no. 142, the maximum useful life of an intangible asset was 40 years. Could an asset a company was amortizing all over a useful life of less than 40 years presently have an indefinite life under Statement no. 142?The practise is maybe. Prior to its implementation companies may not have taken all of the three criteria in Statement no. 142renewability, costs and modificationsinto account in making amortization decisions. Further, it was not an option for an asset to have an indefinite useful life, regardless of how a company evaluated the criteria before Statement no. 142. The limit was 40 years. The bottom line? Even those intangibles that werent assign the full 40-year useful life prior to Statement no. 142 sho uld be evaluated against the statements criteria. They may have indefinite useful lives as well.Referenceshttp//www.sdc.on.ca/sdc6/help/Physical%20Inventory%20Process.htmJennefer M. Mueller. Journal of Accountancy Amortization of Certain Intangible Assets.DECEMBER 2004 / Volume 198, Number 6.