IP 5 - Accounting Term Paper Example | Topics and Well Written Essays - 1250 words

IP 5 - Accounting - Term Paper Example Accounts Receivable: They are recorded at their book value less reserve for doubtful receivables. They consist mainly of real estate, marketing suppliers, customer debit and credit cards that take more than seven days to be processed. Cash and Cash Equivalent: reports investments that mature in less than three months to be cash equivalent. Also, debit and credit cards and electronic transfer transactions that take less than a week to be processed and cash from banks are included. Inventories are valued at the lower of cost since the permanent markdowns are offset from the retail value of the inventory. They use LIFO method to manage inventory in Wal-Mart USA, and FIFO method in Wal-Mart international. Valuing inventory at lower of cost leads to sometimes undervaluing of some inventory(n.a, 2015). Property, Plant and Equipment are recorded at bookvalue. The costs incurred in major improvements are recorded as capital and costs incurred from normal maintenance and repairs are charged as expenses in the income statement. Depreciation of assets is on a straight line basis. Goodwill and intangible assets are valued at fair price through valuation methods. Indefinite life assets and goodwill are not amortized but are annually evaluated for any impairments and during events that might affect the value of the assets Income tax- Deferred tax liabilities and assets are measured using tax rates applicable in the year the temporary differences are to be settled or recovered. Provision for income tax is calculated by using an annual tax rate based on income, the statutory income tax rates and the permanent differences between the tax and book income (n.a,2014). Wal-Mart Company is infamous for the 24 million dollar cover up in Mexican Bribery that occurred in 2012 (Frankel, 2012). This scandal raised questions on the integrity of Wal-Mart’s internal