Three little pigs case

Accounting 381 Project 2: Three Little Pigs Case Study (1 5 points) Due: Thursday, March 11 (at beginning of class). Also, please be prepared to discuss the case and your group’s solution in class on this date. Please work in groups of 3-5 students (submit 1 discussion per group). Groups: You may select your own groups. Please contact me if you are having difficulty finding a group. Required: First, prepare a discussion outlining the alternatives for determining whether inventory impairment exists in the Three Little Pigs case.

Second, if the ompany determines that an impairment of inventory is necessary, prepare a discussion outlining the alternatives for determining whether the impairment should be recognized in an interim period. Relying on the applicable guidance, discuss the appropriate way for Three Little Pigs to evaluate and recognize inventory impairment. Your discussion should include cites to the applicable guidance and how it applies to Three Little Pigs’ transactions. Your discussion should be no more than 3 pages in length. Applicable Professional Pronouncements:

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ASC 270, Interim Reporting (Accounting Principles Board Opinion 28, Interim Financial Reporting) ASC 330, Inventory (Accounting Research Bulletin 43, Restatement and Revision of Accounting Research Bulletins (ARB 43) as amended by FASB Statement No. 151, Inventory Cost. and Emerging Issues Task Force 86-13, Recognition of Inventory Declines at Interim Reporting Dates (EITF 86-13)) ASC 905, Agriculture (Statement of Position 85-3, Accounting by Agricultural Producers and Agricultural Cooperatives (SOP 85-3) AICPA Audit and Accounting Guide, Agricultural Producers and Agricultural Cooperatives (APC))

Additional Notes 1 . Your discussion should begin by discussing alternatives for determining whether an inventory impairment exists at September 30, 2002. There are at least 2 alternative ways to think about the level at which inventory should be examined for impairment: a. Alternative (1) The entire hog inventory should be aggregated for evaluation under the lower of cost or market rule, and impairment measured on an aggregate basis. b. Alternative (2) The hog inventory should be segregated for evaluation under the lower of cost or market rule, and impairment measured on a segregated basis.

Specifically, live hogs and developing hogs to be internally processed should b measured separately from live hogs and developing hogs to be sold to third parties. Given the information presented in the case, you should discuss potential arguments that could be made supporting each alternative. Your discussion should then focus on which alternative you believe to be the correct way to evaluate inventory for impairment given the applicable guidance. If you believe there is not sufficient information provided in the case, then choose an alternative and state any assumptions you are making in your conclusion. The second part of your discussion should assume that an impairment of inventory is deemed necessary. This discussion should discuss whether the impairment should be recognized in an interim period if prices are expected to recover before year-end. There are at least 2 alternative ways to think about whether the impairment should be recognized in the interim period: a. Alternative (1) An impairment of inventory should not be recognized in interim periods if prices are expected to recover before year-end. b. Alternative (2) An impairment may have to be recognized in interim periods even if rices are expected to recover before year-end. ay to recognize impairment given the applicable guidance. If you believe there is not sufficient information provided in the case, then choose an alternative and state any assumptions you are making in your conclusion. 3. You do not need to use a particular format to prepare your discussion. However, your arguments should be clearly presented and include references to applicable guidance (references may be general or specific). 4. The discussion is NOT required to be 3 pages – the instructions state that it should be no more than 3 pages.