The Sinking Ship You are the Chief Financial Officer of a Silicon Valley computer chips manufacturing company. While sitting at home watching the Green Bay Packers vs the San Francisco 49 ers game on TV a news break comes on showing a video clip regarding a ship floundering off the coast of California. The name of the ship "The 55Marlow " rings a bell with you and you remember that. your company has order a shipment of $12,000,000 worth of computer components from a supplier in the Gulf Coast, and those computer components are on this very shipl The news report states that the California National Guard is responding and all personnel on board the ship are being air-lifted to safety but the ship itself will sink within the next couple of hours and all the cargo will be lost at sea. You drive over to your corporate headquarters to review the signed purchase contract for this shipment and discover your corporate controller, who has also seen the news report, has already arrived at the office to do the same thing. You stammer, "If we suffer this loss it might just bankrupt the Company!" The controller looks up from studying the purchase document and with much emotion in their voice says, "The purchase contract shows the shipping terms are FOB Destination." Select the best answer regarding your reaction upon hearing what the controller said: A. You gasp and say "Please tell me we insured the stuff while in transit." B. You mummer "Oh my, are we accounting for this stuff under FIFO?" C. You mummer "Oh my, are we accounting for this stuff under Lifo?" D. You are relieved, but then quickly become concerned about where you will obtain replacement computer parts. E. You ask the controller of the effects of recording the casualty loss on the books and if the Full Disclosure Principle should apply. The Sinking Ship You are the Chief Financial Officer of a Silicon Valley computer chips manufacturing company. While sitting at home watching the Green Bay Packers vs the San Francisco 49 ers game on TV a news break comes on showing a video clip regarding a ship floundering off the coast of California. The name of the ship "The 55Marlow " rings a bell with you and you remember that. your company has order a shipment of $12,000,000 worth of computer components from a supplier in the Gulf Coast, and those computer components are on this very shipl The news report states that the California National Guard is responding and all personnel on board the ship are being air-lifted to safety but the ship itself will sink within the next couple of hours and all the cargo will be lost at sea. You drive over to your corporate headquarters to review the signed purchase contract for this shipment and discover your corporate controller, who has also seen the news report, has already arrived at the office to do the same thing. You stammer, "If we suffer this loss it might just bankrupt the Company!" The controller looks up from studying the purchase document and with much emotion in their voice says, "The purchase contract shows the shipping terms are FOB Destination." Select the best answer regarding your reaction upon hearing what the controller said: A. You gasp and say "Please tell me we insured the stuff while in transit." B. You mummer "Oh my, are we accounting for this stuff under FIFO?" C. You mummer "Oh my, are we accounting for this stuff under Lifo?" D. You are relieved, but then quickly become concerned about where you will obtain replacement computer parts. E. You ask the controller of the effects of recording the casualty loss on the books and if the Full Disclosure Principle should apply
