The Following Disclosure Note Appeared in the 2016 Annual Report

question 95

Essay

The following disclosure note appeared in the 2016 annual report to shareholders of Upton Systems Inc.
Inventories are stated at the lower of cost and net realizable value.Cost is computed using standard cost,which approximates actual cost,on a first-in,first-out basis.The Company provides inventory allowances based on excess and obsolete inventories.
Another disclosure note in the annual report stated:
The Company recorded a provision for inventory,including purchase commitments,totaling $1.40 billion during fiscal 2016,which included an additional excess inventory charge as previously discussed.This additional excess inventory charge was due to a sudden and significant decrease in demand for the Company's products and was calculated in accordance with the Company's accounting policy.
A skeptic may conclude that Upton's policy and practices threaten earnings quality.Discuss how it may do so.

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Definitions:

Immediate Interaction

Direct and prompt communication or engagement between individuals or entities.

Backchannel

A discussion on social media that occurs simultaneously with the speaker's presentation, happening in real-time as the event unfolds.

Parallel Communication

A method of communication where messages are sent simultaneously across different channels or mediums.

Webcasts

Presentations delivered over the internet that can be watched in real-time or downloaded for future viewing.