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Assignment #6 - Analysis of the Effects of Capitalizing Versus Expensing 04-19-2017 LBMH bills Medicare/insurers on the day products are shipped. According to the Company,
Assignment #6 - Analysis of the Effects of Capitalizing Versus Expensing 04-19-2017 LBMH bills Medicare/insurers on the day products are shipped. According to the Company, Medicare normally reim- burses 80% of the amount billed and the balance is collected from private insurance companies, if applicable. LBMH's takes about 60 to 65 days to collect from Medicare and other insurers. On the procurement front most of LBMH's suppliers are within one day's shipping distance and they are primarily in the U.S. The Company generally uses ground shipping and orders inventory on a quarterly basis. Proximity to its suppliers allows LBMH to keep its inventory lean but urgent requirements can usually be replenished within a day's notice. Questions. - LBMH's Balance Sheet, Income Statement and Operating Section of its Cash Flow Statement are presented in Exhibits 4, 5 and 6. You should only consider the direct financial statement effects with respect to changes in accounting for LBMH's advertising costs and not consider any other possible "side effects". LBMH's Common Size Balance Sheet, Common Size Income Statement, and Ratios and presented In Exhibits 7, 8 and 9. a. For the years ended September 30, 2010, 2011, 2012, 2013 and 2014, what would LBMH's In- come (Loss) before Income Taxes have been if it expensed its advertising costs instead of capitalizing them
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