Asset Recognition and Operating Assets Both Dollar Tree and Dollar General only have sales transactions that are in cash. Neither company has accounts receivables on their balance sheet. Attachment 28 (page XXX) has many of the line items and results from financial ratios used in this section. Dollar Tree reported $1,035,700 in inventory for the fiscal year 2014; Dollar General reported $2,782,521. Dollar Tree’s inventories are stated at the lower of cost or market with cost determined on a weighted-average basis (dollar tree 10-k, 2015, p. 34). Dollar General’s inventories are stated at the lower of cost or market with cost determined using the LIFO method (dollar general 10-k, 2015, p. 34). Dollar general recorded a LIFO provision …show more content…
To summarize, Dollar Tree believes that they have substantial purchasing power and flexibility in sourcing decisions. They believe their ability to select quality merchandise helps to minimize inventory markdowns. No vendors are allowed to account for more than 10% of merchandise purchased. Dollar General states that they are able to obtain core merchandise from multiple vendors; however, this could cause different quality and prices if one vendor does not have enough stock on hand. They also use third-party trucking companies to deliver goods to their store. These trucking companies are dependent on diesel fuel; increasing fuel prices could cause inventory prices to …show more content…
Dollar Tree’s property, plant and equipment (PPE) as a percent of total assets in the fiscal year 2014 was 33.94%; Dollar Generals was 18.85%. Dollar Tree’s PPE as a percent of total assets has been decreasing over the last three-year period. PPE was the largest asset account for fiscal year 2014 and 2013; PPE is a significant account for Dollar Tree. Attachment 30 shows a break-down of the items that make up PPE. Dollar General’s PPE as a percent of total assets have been declining over the last three-year period. Three other asset accounts are larger than PPE; so PPE is not as significant for Dollar General as it is for Dollar Tree. Both companies used the straight-line depreciation method. Both companies used 39-40 year useful life for the buildings. Dollar Tree uses 3-15 year useful life for furniture, fixtures and equipment. Dollar General uses 3-10 year useful life for furniture, fixtures and equipment. Both companies PPE have decreased slightly over the three-year period; Dollar Tree has a larger percentage of PPE than Dollar