Course Project, Notes to Consolidated Financial Statements
Notes to Consolidated Financial Statements
Note 1
Business and Summary of Significant Accounting Principles (10 items)
Description of Business
The Open-Road Motorcycle Company is the largest online retailer of salvage title motorcycles. We are focused on bringing the customer the best value on entry level motorcycles by providing lower prices than our competitors. Our motorcycles are sold all over the United States, and we currently have 30 stores all across the country.
Property, Plant and Equipment
All property, plant and equipment are stated at cost and depreciated over their useful lives. All depreciation expense incurred is derived using the straight line method. We do not depreciate our land. We estimate our useful life for our assets accordingly; buildings have a 40 year life, computer equipment has a 5 year life and the repair equipment a 15 year life. The estimated lives of our assets are reviewed periodically to determine if any impairment is present so the useful lives and depreciation can be adjusted for accuracy.
Short-term Investments
All of our investments are comprised of trading securities comprised of debt instruments in different industries. The securities are reported at fair value with any unrealized gains and losses stated on net income. Securities that are still held at the end of the fiscal year are evaluated and are adjusted if necessary.
Inventory Valuation
All of our merchandise on our website is recorded at cost or fair value, whichever is lower. The salvage motorcycle inventory is recorded at cost. We value our inventory using the average method. If the motorcycle is considered “unsellable”, it becomes disassembled and sold for parts. All parts received from motorcycles that have been disassembled are not recorded because the cost has already been recorded from the original purchase. The motorcycle would be written off as a loss on net income and all sales from the parts are considered gains and are stated on net
Note 1
Business and Summary of Significant Accounting Principles (10 items)
Description of Business
The Open-Road Motorcycle Company is the largest online retailer of salvage title motorcycles. We are focused on bringing the customer the best value on entry level motorcycles by providing lower prices than our competitors. Our motorcycles are sold all over the United States, and we currently have 30 stores all across the country.
Property, Plant and Equipment
All property, plant and equipment are stated at cost and depreciated over their useful lives. All depreciation expense incurred is derived using the straight line method. We do not depreciate our land. We estimate our useful life for our assets accordingly; buildings have a 40 year life, computer equipment has a 5 year life and the repair equipment a 15 year life. The estimated lives of our assets are reviewed periodically to determine if any impairment is present so the useful lives and depreciation can be adjusted for accuracy.
Short-term Investments
All of our investments are comprised of trading securities comprised of debt instruments in different industries. The securities are reported at fair value with any unrealized gains and losses stated on net income. Securities that are still held at the end of the fiscal year are evaluated and are adjusted if necessary.
Inventory Valuation
All of our merchandise on our website is recorded at cost or fair value, whichever is lower. The salvage motorcycle inventory is recorded at cost. We value our inventory using the average method. If the motorcycle is considered “unsellable”, it becomes disassembled and sold for parts. All parts received from motorcycles that have been disassembled are not recorded because the cost has already been recorded from the original purchase. The motorcycle would be written off as a loss on net income and all sales from the parts are considered gains and are stated on net