This module is an instructor's preview version of the DHB Industries Inc – Dodging Bullets video produced for the Phillips/Libby/Libby, 3e, Fundamentals of Financial Accounting textbook from McGraw-Hill/Irwin. This particular video describes how to apply the lower of cost or market (LCM) rule to accounting for inventory, illustrates its impact on the balance sheet and income statement, as well as explains how fraud was perpetrated at DHB. (Time 5:32 min)
Type of Material:
Short (5:32 minute) video with various types of slides shown.
In class viewing, as homework, or for individual review.
HTML Browser, Browser Plug-ins – Adobe Flash Player
Identify Major Learning Goals:
As a result of viewing this video, student will be able to:
Explain the lower of cost or market rule for inventory valuation as well as how it impacts the balance sheet and income statement.
Describe how fraud was perpetrated at DHB Industries.
Target Student Population:
High school or college introductory level accounting.
Prerequisite Knowledge or Skills:
No prerequisite knowledge required.
This learning object is not only about the lower of cost or market (LCM) inventory rule, but it also encompasses fraud and ethics as well. The video clip begins with a simple lemonade stand analogy supported by an animated balance sheet and income statement. Next, the module incorporates a real-life example, DHB Industries, Inc., a manufacturer of (faulty) zylon-plated bullet-proof vests for police officers and military personnel. Information provided is accurate and summarizes concepts very well. Content is both current and relevant.
This module is only a preview. The non-watermarked version is available to instructors who adopt the textbook - Phillips/Libby/Libby, 3e, Fundamentals of Financial Accounting (McGraw-Hill/Irwin).
The discussion of the LCM rule is a high-level overview of the concept as it applies to one product. Application of the rule to multiple products is absent.
Potential Effectiveness as a Teaching Tool
This video demonstrates the relationship between an accounting rule and how it can be misused. The authors intent is for the video to be assigned prior to covering this concept in class. The real-life example also addresses corporate ethics, including financial statement and securities fraud. Concepts are reinforced progressively building on prior concepts. The right mix of audio and text have been included in this video, making it appeal to various learning styles. Overall the module is very efficient and effective, in that students will be able to grasp an important accounting concept in a short time.
While not necessarily a concern, some instructor context may be required prior to having students view the video clip. The LCM rule is generally introduced in a principles of financial accounting course after the various inventory valuation methods (specific identification, FIFO, LIFO, and weighted average cost)are covered.
Ease of Use for Both Students and Faculty
This video is excellent in terms of design quality. It is visually appealing and the narration uses an engaging tone comparable to professional programming on television. The video presentation will appeal to various learning styles as a variety of material and media are used (graphics, animations, charts, audio, and text). Although this video clip is designed to supplement Phillips/Libby/Libby, 3e, Fundamentals of Financial Accounting (McGraw-Hill/Irwin), it most likely can be used with almost any principles of accounting textbook.
While learning technically is passive and lacks interactivity, the content of the video should be thought provoking and easily lend itself to classroom discussion.
Other Issues and Comments:
Excellent mini-tutorial covering the LCM rule for inventory, fraud, and ethics.
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