Intermediate accounting Essay Example for Free

Intermediate accounting Essay1. Distinguish between perpetual and periodic inventory dodge. wherefore conduct fleshly inventory? When should, if any a animal(prenominal) inventory count occur?Perpetual inventory system is a system for determine the cost of goods sold by keeping continuous records of the physical inventory as goods atomic number 18 bought and sold. In other words, under the perpetual inventory system records are kept of the quantity and usually 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 occur after the Pre-Physical Inventory update is run. It means that no movements of th e product can occur until after the actual count is make. 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 within the product group can 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 over the period.2. Intangible assets bring on two main characteristics. They lack physical existence and they are non 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 cause no physical substance but have a value based on rights or privileges that accrue to the owner. Intangible assetsdont have the obvious physical value of afactory or equipment th ey can prove very valuable for a firm and can be critical to its long-term achievement or failure. For example, a company such as Coca-Cola wouldnt be nearly assuccessful was it not for the high value obtained through its bulls eye-name recognition. Although brand recognition is not a physical asset you can see or touch, its positive effects on bottom-line profits can prove super valuable to firms such as Coca-Cola, whose brand strength drives global sales year after year.In FASB STATEMENT NO. 142, the useful purport of true intangible assets is difficult to judge, particularly assets that involve contracted 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 indefinite, the asset is not amortized. Although the question of whether an assets useful life is definite or ind efinite may seem straightforward, certain intangiblesparticularly those that are a go forth 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 over a useful life of less than 40 years now have an indefinite life under Statement no. 142?The answer 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 assigned the full 40-year useful life anterior to Statement no. 142 should be evaluated against the statements criteria. They may have indefinite useful live s as well.Referenceshttp//www.sdc.on.ca/sdc6/help/Physical%20Inventory%20Process.htmJennefer M. Mueller. Journal of Accountancy amortisation of Certain Intangible Assets.DECEMBER 2004 / Volume 198, Number 6.