Cineplex is helpful information for the manager

Cineplex uses
the Straight-Line method in calculating amortization (“Cineplex 2016 Annual Report”).
In this method, amortization expense is the same for each year of the assets
useful life (Jerry J.Weygandt 290). To calculate amortization in this method,
residual value is deducted from the cost of the assets to determine the total amortizable
cost of the asset (Jerry J.Weygandt 290). The amortizable cost is then divided
by the assets estimated useful life to determine the annual amortization method
(Jerry J.Weygandt 290). Cineplex’s amortization represents property,
leaseholds, equipment and of its intangible assets (“Cineplex 2016 Annual Report”).
Choosing how Cineplex values inventory impacts their cost of goods sold and the
overall state of finances (“What Are
the Different Types of Inventory Methods?”). Cineplex uses a perpetual
inventory method (“Cineplex 2016 Annual Report). Since Cineplex has an
active inventory due to its reoccurring sales, it is the best to have a
scanning system to constantly track the inventory that goes in and out (“What Are the Different Types of Inventory
Methods?”). This is helpful information for the manager of Cineplex to
track the inventory on a daily basis and have exact figures at the end of the
day (“What Are the Different Types of
Inventory Methods?”). Inventory at Cineplex is stated at the lower of
cost and at the net realizable value. The cost is determined using the
First-In, First-Out (FIFO) method (“Cineplex 2016 Annual Report”).
The net realizable value is the estimated selling price less the applicable
selling expenses (Jerry J.Weygandt 290). Under this method, Cineplex allocates
the oldest goods on hands to be sold first, this is what they assume (Jerry
J.Weygandt 290). This method used by Cineplex eliminates obsolescence by using
this method because they match the physical flow of their inventory very well (“What Are the Different Types of Inventory
Methods?”). Since Cineplex uses the FIFO method, this results in a
higher net income (Jerry J.Weygandt 290). This is because their expenses are
matched against their revenue (Jerry J.Weygandt 290). This method also gives
Cineplex the best balance sheet valuation and the highest cost of goods sold
(Jerry J.Weygandt 290).

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