Audiovox 2008 Annual Report Download - page 122

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Audiovox Specialized Applications, LLC And Subsidiary
(A Limited Liability Company)
Notes To Financial Statements
The Company accounts for these investments in accordance with Financial Accounting Standards Board (“FASB”) Statement No.
115. Management determines the appropriate classification of securities at the date individual investment securities are acquired and
the appropriateness of such classification is reassessed at each balance sheet date. Since the Company neither buys investment
securities in anticipation of short-term fluctuation in market prices nor commits to holding debt securities to their maturities, the
investments in debt securities have been classified as available-for-sale in accordance with Statement No. 115. Available-for-sale
securities are stated at fair value, and unrealized holding gains and losses, if any, are reported as a separate component of members'
equity.
The amount classified as current assets on the accompanying balance sheets represents the amount of marketable debt securities
expected to be sold during the next year.
A decline in the market value of any available-for-sale security below cost that is deemed other-than-temporary results in a reduction
in carrying amount to fair value. The impairment is charged to earnings and a new cost basis for the security is established. The
Company considers numerous factors, on a case by case basis, in evaluating whether the decline in market value of an
available-for-sale security below cost is other-than-temporary. Such factors include, but are not limited to, (i) the length of time and
the extent to which the market value has been less than cost; (ii) the financial condition and the near-term prospects of the issuer or the
investment; and (iii) whether the Company’s intent to retain the investment for the period of time is sufficient to allow for any
anticipated recovery in market value.
Trade receivables:
Trade receivables are carried at original invoice amount less an estimate made for doubtful receivables based on a review of all
outstanding amounts on a monthly basis. Trade receivables in the accompanying balance sheets at November 30, 2007and 2006 are
stated net of an allowance for doubtful accounts of approximately $166,000 and $50,000 respectively. Management determines the
allowance for doubtful accounts by identifying troubled accounts and by using historical experience applied to an aging of
accounts. Trade receivables are written off when deemed uncollectible. Recoveries of trade receivables previously written off are
recorded when received. Generally, a trade receivable is considered to be past due if any portion of the receivable balance is
outstanding for more than 30 days.
Inventories:
The Company values its inventory at the lower of the actual cost to purchase (primarily on a weighted moving average basis) and/or
the current estimated market value of the inventory less expected costs to sell the inventory. The Company regularly reviews
inventory quantities on-hand and records a provision for excess and obsolete inventory based primarily from selling prices, indications
from customers based upon current price negotiations and purchase orders. The Company’s industry is characterized by rapid
technological change and frequent new product introductions that could result in an increase in the amount of obsolete inventory
quantities on-hand.
8
Source: AUDIOVOX CORP, 10-K, May 14, 2008