Select an item from the 2017 Netflix balance sheet, identify it's valuation policies and explain if...
Select an item from the 2017 Netflix balance sheet, identify it's valuation policies and explain if you think it;s the most appropriate option. Justify your answer with credible sources and clear argument.
Homework Answers
The item that I have selected from Netflix’s 2017 balance sheet is “property and equipment, net”. For 2017 this asset stood at 319,404 (in $ thousands).
Netflix’s valuation policy with regards to property and equipment is to carry them at cost and deduct accumulated depreciation from them. Depreciation on property and equipment is calculated using the straight line method and the duration is the lesser period of estimated useful life or the lease term of leasehold improvements. All leased buildings are capitalized and are included in property and equipment.
Yes, Netflix’s valuation of its property and equipment is appropriate and as per the provisions of GAAP. The rule for the same is mentioned in Financial Accounting Standards Board (FASB) Codification Topic ASC 360.
References: https://rsmus.com/pdf/us-gaap-vs-ifrs-property-plant-equiment.pdf
http://accounting-financial-tax.com/2009/01/property-plant-and-equipment-valuation/
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