Business

The purpose of our firm XYZ Compnay, is to discuss in great length the client understanding and the goals of our firm and how they pertain to your company, the ABC Company. We understand that your company still has some concerns about our discoveries, and It is the intention of our firm to provide, ABC Company with a written explanantion that will address your organizations needs and concerns. Our firm has completed the initial analysis of the ABC Company and has determined that further explanation is needed to assist in reaching your organizations goals. In this letter, we will discuss the following item in detail: adjusting lower cost of market inventory on valuation, capitalizing interest on building construction, recording gain or loss o asset disposal, and adjusting goodwill for impairment.

When discussing the adjustment of lower cot of market inventory, The American Institute of Certified Public Accountants (AICPA) states "The primary basis of accounting, is cost, which has been defined genereally as the price paid or consideration given to aquire an asset. As applied to inventories, cost mans in principle the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location" (AICPA,2010) By using this method, it will help ABC Company to report losses accurately on your income statements. In order to help detrmine LCM, it is important to recognize that Net Realizable Value (NRV), this is part of Genereally Accepted Accounting Principles (GAAP) rules which apply to the valuing inventory, this usefule tools is used in order to not overstate or understate the vlue of ABC Company's inventory goods (Investopedia,2010).

According to All Business.com, "When an asset such as a building is constructed, there is often a considerable period between the start of a project and its completion. Because the cost of an asset should include all costs incurred to prepare it for use or readiness for...