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Essay / Research Paper Abstract
This 3-page paper provides an example of how Belk might handle $.7 million in charges from severance and termination fees of IT employees to outsourcing. Discussed are allocated and unallocated costs, and impairment. Bibliography lists 2 sources.
Page Count:
3 pages (~225 words per page)
File: D0_MTbelkalco.rtf
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Unformatted sample text from the term paper:
service. What is available online for this company is fairly general, the companys December 2008 10Q (or quarterly report form) did make mention of asset impairment and exit costs. According
to the statement, Belk recorded $.7 million in exit costs that were related to planned outsourcing of information technology and support functions (Belk, 2008). This time period was the three
months that ended November 1, 2008 (Belk, 2008). During the nine-month period ending November 1, 2008, the company recorded $2.1 million in exit costs, again, focused on severance costs involve
with outsourcing of technology and support functions (Belk, 2008). Now, these would be costs shared by the company, as its somewhat tough to "divvy" severance costs - in this case,
it could be shared by HR and technology, but not knowing how, specifically, Belk might divide this, well assume its from a general fund.
However, it would be better to assign this quarter of a million dollars to unallocated costs - which, by definition, are corporate costs that arent directly or indirectly
associated with activities involved with providing a good or service for sale. Unallocated costs, in fact, arent calculated as a part of cost of goods sold.
But interestingly enough, instead of formulating this as an unallocated cost, Belk decided to report the above as an impairment charge. Impairment is more of an
intangible - according to Rick Wayman, impairment is kind of a catch-all for goodwill (2005). Because of new accounting rules, goodwill is to be assigned to a companys reporting units
that might benefit from the goodwill - but if the recorded value of the goodwill is greater than whats deemed to be fair market, then the goodwill is impaired, and
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