Choose a US public company that sells inventory (everyone needs to pick a different company). Review their
most recent Annual Report.
Questions
What inventory costing method does the company use? Explain why you think the company uses this particular
method?
What might happen to the company’s income and inventory balance if they chose an alternative costing
method? Be specific in your example.
Does the company value its inventory at a lower of cost or market (LCM)? If so, how does the company define
the market? What factors might it consider in deciding whether or not to write down its inventory?
If the company does not use LCM, what method does the company use to value its inventory in consideration
of possible inventory write-downs?
Sample Solution
