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
Evaluate policies for valuation of inventories (lower of cost or market).
Establish a policy that quantitatively & qualitatively aligns with US GAAP accounting standards.
Advise operational improvements & recurring analyses to address risks of impairment.
SOLUTIONS
Evaluated clients' average sales price vs. cost.
Analyzed inventory and interviewed product line managers to establish quantitative & qualitative evaluation of excess and obsolescence.
Recommended valuation impairment values for inventory.
Prepared processes & procedures on how to complete recurring evaluation and address risks & opportunities identified within the E&O evaluation.
high risk products driving changes in procurement & product marketing