3D Bicycle Company |
Notes to Consolidated Financial Statements |
Luz M. Aponte |
Summary of Significant Accounting Policies
Nature of Operations:
The 3D Bicycle Company is a retailer parts and services for bicycles. We are focused on bringing the customer the best value on bicycles by providing the lowest price on our parts and services. Our parts and services are sold all over all the states in United States and Puerto Rico. Currently we have two stores in all the fifty-states across the nation and one in Puerto Rico.
Use of Estimates
Our financial statements are prepared to meet all the requirements in accordance with the Generally ...view middle of the document...
The securities are reported at fair value with unrealized gains and losses stated on net income.
All the merchandise on our stores is recorded at cost or fair value assuming which one is lower. All returns are not recorded because the cost of those parts has been already recorded from the original purchase.
Revenue derived from parts and services and recorded when parts are shipped and services have been provided. We record an estimated revenue reduction for future adjustments to customers account. The company has no significant remaining obligations, the price to the customer is fixed or determinable and collectability is reasonably assured or probable. Parts or service revenue is recognized when sales is done.
Costs of Products Sold
The Cost of Products Sold refers to the direct materials and supplies used in the manufactured of the bicycle parts, including manufacturing labor, depreciation expense, and the overhead expense necessary to get the finished product. The Cost of products sold includes, warehousing costs and shipping and handling.
All costs involved with the advertising including television, radio, and internet ads for our products are expensed when incurred. Our advertising cost every year is $3.5 million, since we open our business on 2009.
We record accounts receivables as net realizable value. This value is the balance of the amount due on sales on credit less uncollectable amounts. We estimated the amount based on past write offs. Our company credit policy extends a 60 days period to make a full payment after the completion of sale.
3D Bicycle Company is right now involved in a lawsuit waiting for a settlement agreement. A former employee got injured in an accident involving wrong handling of the shipment. We are considered the settlement probable and we are estimated cost is $1 million dollars.
Pension and Other Postretirement Benefit Plans
3D Bicycle Company contributes to pension and other postretirement health care plan for all the employees. We contribute 2% of gross wages into the pension plan of the employee choice.
Our inventory is comprised to prompt bicycle parts and fully repaired services. Inventories are valued at the lower cost or market. We base our cost on the average cost method. Repaired bicycles have labor costs included in the basis of valuation. Inventories consisted of the following (in millions):
Bicycle parts inventory
Property, Plant and Equipment
The table below will illustrate our property, plant, and equipment (in millions):
Buildings and garages
Repair equipment and computers
$ 350 $300
Less: accumulated depreciation
Property, plant, and...