MRV Communications (MRVC) opinions? Message Board

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Technology Stocks : MRV Communications (MRVC) opinions?

MRVC 9.975

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Aug 15 5:00 PM EST

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To: akmike who wrote (38933)	5/8/2002 8:51:44 PM
From: Duffeck	Read Replies (1) of 42804

<<Please run the accounting treatment by me where CSCO is giving a purchaser of new equipment a discount of 70% off the full price for a trade in of old equipment and booking the revenue based on the full price.>> I'll try. But lets use cars as an example. Say I buy a new 2001 Lamborghini for $100,000. Because car sales are a bit soft the dealer credits me $70,000 for my 1996 Lamborghini. Therefore in terms of cash, I receive a 70% discount off the retail price. Lamborghini's cost to manufacture a 2001 model is $62,000. So the gross margin or COGS would be $62,000 divided by the sales price $100,000 ($30,000 cash plus $70,000, trade in value)or 62%. The value of Lamborghini's inventory would then increase by $70,000. Some time down the line when times are better Lamborghini would probably write off the trade in value of my old car assuming it remains unsold. How would this violate GAAP? I think Greg may be on to something. What is happening with CSCO's inventory? duff

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