AcSEC does not have the authority to provide further guidance on level-A topics, such as fixed asset and
inventory accounting.
The lower selling prices, combined with unscheduled downtime and an adverse impact of average
inventory accounting, are expected to result in an operating loss for the division of approximately $3 million.
General Financial and Tax Consulting is positioned to focus on four areas: fixed asset
inventory accounting, federal depreciation look-back analysis, personal property tax compliance and reduction of personal property tax assessments.
Citing Thor Power Tool, 439 US 522 (1979), the court pointed to the Supreme Court's two-prong test for the acceptability of an
inventory accounting method: It must conform to GAAP and must clearly reflect income.
Management's estimate is based solely on current preliminary data and is subject to completion of its internal review of its
inventory accounting.
Figure 2 is a simplified decision tree for the portion of the hypothetical
inventory accounting dispute that hinges on the accuracy of the taxpayer's method.
For information regarding West Marine's merchandise
inventory accounting, please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operation--Critical Accounting Policies and Estimates--Merchandise inventories and vendor allowances" in West Marine's Form 10-K for the fiscal year ended December 31, 2005 and in each Form 10-Q filed by West Marine in 2006.
471 (b) is not limited to the retail trade and (6) most taxpayers are now allowed to use the automatic change provisions to change their
inventory accounting method to a method allowing shrinkage estimates.
Second, in estimating the impact on our third quarter results related to the different
inventory accounting methods, we had previously projected that the impact of these changes would be a reduction in earnings of approximately $(0.
Both 10-Qs are delayed because the Company's independent registered public accounting firm has not yet rendered any decision with respect to a previously announced accounting issue involving the Company's historic
inventory accounting method.
446(b) discretion because Wal-Mart's
inventory accounting practice was "sound," the standard for taxpayers with perpetual inventories under Regs.
Companies using the perpetual method of
inventory accounting often take "cycle counts" of inventory on a rotation basis during the tax year and do not necessarily take a year-end inventory count.
