In: Accounting
examine the costs that Wal-Mart includes in inventory and cost of sales. Defend the three (3) descriptions that Wal-Mart used to classify inventories, and suggest two (2) other descriptions that Wal-Mart could include within their notes that would be useful to financial statement users. Justify your response.
$ million |
||
Particulars |
2015 |
2014 |
Cost of Sales |
365,086 |
358,069 |
Inventory |
45,141 |
44,858 |
According Walmart’s 2015 Annual report, Walmart uses three methods to classify its segments of inventories –
The above three methods being used by Wal-Mart is as per accounting regulations and are considered as prudent accounting practices.
As for any additional statements that Walmart can include in their notes that would be useful to financial statement users, I would suggest that they explain why they used different inventory methods for each of their segments and the impact that each method has on that segment.