Groupon, Kimberly Clark, Stone Ridge, Sherwin Williams
Goods on Consignment
This occurs when a company gives inventory to another company to sell for them.
The Manufacturer would report the inventory for this on their balance sheet even though they
have given it to (X company) to sell it for them.
Reporting Gross Profit
Can only use it if you have ownership characteristics. (Risks of being an owner).
Cannot use it if acting as a middleman.
Lower of Cost and Net Realizable Value
Inventory recorded at less than cost when:
The future value of inventory is lower than cost due to damage, usage, obsolescence,
Or if it can be replaced at less than the original cost.