Inventory Impairment Valuation

VIP SOLUTIONS CASE STUDY

BACKGROUND

Our client produces off the shelf and customized hardware in the telecom and broadcasting industries.  Product lines generally have a seven year sales cycle before next generation replacements are released.  Routinely, components within a product line will be replaced creating an evolving subset of components within a product line.

VIP Solutions Group was engaged to evaluate our client’s policy for valuation of inventories (lower of cost or market) and establish a policy that quantitatively and qualitatively aligns with US GAAP accounting standards.

OBJECTIVES

VIP Solutions Case Study

Evaluate policies for valuation of inventories (lower of cost or market).

VIP Solutions Case Study

Establish a policy that quantitatively & qualitatively aligns with US GAAP accounting standards.

VIP Solutions Case Study

Advise operational improvements & recurring analyses to address risks of impairment.

SOLUTIONS

VIP Solutions Case Study

Evaluated clients' average sales price vs. cost.

VIP Solutions Case Study

Analyzed inventory and interviewed product line managers to establish quantitative & qualitative evaluation of excess and obsolescence.

VIP Solutions Case Study

Recommended valuation impairment values for inventory.

5

Prepared processes & procedures on how to complete recurring evaluation and address risks & opportunities identified within the E&O evaluation.

Quantitatively identified
high risk products driving changes in procurement & product marketing