Audiovox 2004 Annual Report Download - page 137

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Audiovox Specialized Applications, LLC And Subsidiary
Notes To Financial Statements
November 30, 2004 and 2003 are stated net of an allowance for doubtful accounts
of approximately $100,000 and $411,000 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.
Inventories:
Inventories consist principally of finished goods and are stated at the lower of
cost (primarily on a weighted moving average basis) or market.
Depreciation:
Depreciation of leasehold improvements and equipment is computed principally by
the straight−line method over the following estimated useful lives:
Years
Leasehold improvements 5
Machinery and equipment 5−10
Toolding and molding 3
Transportation equipment 5
Office furniture and fixtures 10
Computer equipment 3−5
Booth displays 7
Warranties:
The Company provides a limited warranty primarily for a period of up to three
years for its products. The Company's standard warranties require the Company,
the original equipment manufacturer or its dealers to repair or replace
defective products during such warranty periods at no cost to the consumer. The
Company estimates the costs that may be incurred under its basic limited
warranty and records a liability in the amount of such costs at the time product
revenue is recognized. Factors that affect the Company's warranty liability
include the number of units sold, historical and anticipated rates of warranty
claims, and cost per claim. The Company periodically assesses the adequacy of
its recorded warranty liabilities and adjusts the amounts as necessary. The
Company utilizes historical trends and analytical tools to assist in determining
the appropriate loss reserve levels.
Changes in the Company's warranty liability during the years ended November 30,
2004, 2003, and 2002 are as follows:
2004 2003 2002
−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−−
Balance, beginning $ 2,016 000 $ 1,605,000 $ 1,098,000
Accruals for products sold 2,016,430 1,888,292 2,508,245
Payments made (1,850,430) (1,477,292) (2,001,245)
−−−−−−−−−−− −−−−−−−−−−− −−−−−−−−−−−
Balance, ending $ 2,182,000 $ 2,016,000 $ 1,605,000
=========== =========== ===========
Exhibit 99.1
8