Staples Inc Case Analysis
uses the assumption of weighted-average cost of inventory. Office Depot, Inc. uses the same assumption, except in certain European Countries, where the Company uses the first-in-first-out method for the operations.
Both companies’ inventories are related to the office products. These products don’t have expiration date as perishable goods do and they have slightly different costs for the same type of product due to sourcing difference. So the weighted-average cost method used here is reasonable and better for inventory measurement.
¬ Depreciation Method Both companies use the straight-line method to recognize the depreciation and amortization. For Staples, Inc., the estimated useful lives for its assets are categorized as: 40 years for buildings; 3-10 years for furniture and fixtures; and 3-10 years for equipment, which includes computer equipment and software with estimated useful lives of 3-7 years. For Office Depot, Inc., the useful lives of depreciation assets are estimated to be 15-30 years for building and 3-10 years for furniture, fixtures and equipment.
¬ Horizontal …show more content…
In 2014, sales and profits in Australia were less than expected, and challenges remain in generating sufficient growth to improve the long-term profitability of the business. As for its China reporting unit, sales in 2014 declined as the business decided to exit certain unprofitable arrangements, whereas growth in ecommerce sales was not sufficient to offset the loss of these arrangements. Future events and changing market conditions may impact the Company’s key inputs and may result in future goodwill impairment charges which could have a material negative effect on the Company’s operations