Question: Research In Motion reports in notes to its financial statements that, in addition to its merchandise sold, it includes the following costs (among others) in cost of goods sold: customer shipping and handling expenses, warranty expenses, and depreciation expense on assets used in manufacturing.
Required: 1. Why do you believe Research In Motion includes these costs in its cost of goods sold?
2. What effect does this cost accounting policy for its cost of goods sold have on Research In Motion's financial statements and any analysis of these statements? Explain.
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3. Access Research In Motion's financial statements for the fiscal years after February 27, 2010, from its Website (RIM.com) or the SEC's EDGAR Website (sec.gov). Review its footnote relating to Critical Accounting Policies and Estimates. Has Research In Motion changed its policy with respect to what costs are included in the cost of goods sold? Explain.