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Cineplex uses
the Straight-Line method in calculating amortization (“Cineplex 2016 Annual Report”).
In this method, amortization expense if the same for each years of the assets
useful life (Jerry J.Weygandt 290). To calculate amortization in this method,
residual value id deducted from the cost of the assets to determine the
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 you value inventory impacts
your cost of goods sold, and your 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 sales, it’s 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 started 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 to using this method, Cineplex matches the
physical flow of their inventory very well and accounts for good business
practice (“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 are the lower unit coasts of
their first units purchased (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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