A university auxiliary running bookstore businesses, the University Shop, was contemplating an overvalued inventory at year end. The overvaluation was mostly a result of changes in the textbook industry, including more regular text revision cycles and increased competition from internet sellers and ebooks, in addition to conventional competitions. The immediate dilemmas were to account for the valuation loss on inventory of non-returnable, outdated novels and to value the remaining retail inventory for reporting purposes.
Since the non profit applied generally accepted accounting principles, it was required to report its stock consequently, valuing inventory at lower of cost or market. Of long-term concern to the management of the Store was the demand to handle the risk of inventory obsolescence. Managers needed to gauge the weaknesses in stock management processes and develop control procedures minimizing future stock obsolescence.
The University Store Textbook Travails Case Study Solution
PUBLICATION DATE: October 01, 2011 PRODUCT #: NA0188-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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