Merchandise Inventory

Lagan Kanda(), Abdullahi H(), Inho Lee(209139312)

RA8-1

1. Inventory at January 1 2011 was $1,957,525 (In thousands of Canadian dollars)                

Inventory at December 31 2011 was $2,042,302 (In thousands of Canadian dollars)

Shoppers reports merchandise inventory in their balance sheet, this also includes prescription inventory as well. During the financial year, Shoppers Drug Mart recorded $39,943 (In thousands of Canadian dollars) as an expense for the write down of inventory as a result of net realizable value being lower than cost of goods sold. Inventory held at the end of the year had increased slightly compared to the beginning of the year.

1. Inventory is comprised of merchandise inventory, which includes prescription inventory, and is valued at the lower of cost and estimated net realizable value. Cost is determined on a FIFO basis. Cost includes all direct expenditures and other costs incurred in bringing inventory to its present state and location. Shoppers Drug Mart classifies rebates and other consideration received from a vendor as a reduction to the cost of inventory unless the rebate relates to the reimbursement of a selling cost or payment for services. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated selling expenses. There were no adjustments necessary on conversion to IFRS from Canadian GAAP.

RA9-1

Review Shoppers Drug Mart's balance sheet. Identify all financial investments that are reported.

You may need to read the notes to the financial statements to get the necessary details.

1. Financial instuments/investment NOT SURE ABOUT QUESTION a).
   Investment property? Note 15
   Current portion of long-term debt Note 20
   Long-term debt Note 20
   Equity instruments?

1. Shoppers Drug Mart have investments in subsidiary companies such as: Shoppers Home Health Care Canada Inc., Shoppers Drug Mart Specialty Health Inc., Med System Technologies Inc., Shoppers Drug Mart Inc., Shoppers Drug Mart (London) Limited, Pharmap? Inc., 911979 Alberta Ltd., Shoppers Reality Inc., San’s Health Inc. (PLEASE CHECK THE NAMES BECAUSE MY BOOK IS PDF AND CAN’T READ WELL) . All of Shoppers Drug Mart’s subsidiaries are wholly-owned which means 100% owned. This can tell by looking at the balance sheet and income statement because parent’s corporation Shoppers Drug Mart must report consolidate combined balance sheet and combined income statement line-by-line.

Should we include any information on this paragraph?

What information is disclosed about these subsidiaries?

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors judgment. including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error.