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 $"$SS Symone Marie" rings a bell and you remember that your company has ordered a shipment of $$12,000,000$ worth of computer components from a Gulf Coast supplier, and those computer components are on this very ship!

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 bolt out of your chair and 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 corporate office to do the same thing. You stammer, "With this loss it might just bankrupt the Company, and we will both be out of a job!" 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 mummer "Understood, now are we accounting for this stuff under FIFO or LIFO?"

B$.$ You ask the controller for the AJE when recording the casualty loss on the books, and the effects on the Common Size Financial Statement analysis.

C$.$ You gasp and say "Please tell me we insured the stuff while in transit."

D$.$ You wonder to yourself how to apply the Full Disclosure Principle, Revenue Recognition principle, and Matching Principle in unison for this loss.

E$.$ You are relieved, but then quickly become concerned about where you will obtain replacement computer parts.

F$.$ You clutch your chest and say "What was our expected GP $\%$ on this consignment?"

G$.$ You say $"$Oh my$!$ Our only hope now is to switch to a Periodic Inventory Count at FYE to mitigate the impact on our balance sheet."

H$.$ You ask "What are the contract terms regarding the $3/10,$ net $60$ discount period?"