What kinds of risks does a firm like Amazon.com face with respect to safeguardin

Question

What kinds of risks does a firm like Amazon.com face with respect to safeguarding its assets? What types of controls do you think it already has in place to minimize these risks? Go to the firm’s website and click on “Investor Relations”. You’ll be able to find the firm’s annual report to help you answer these questions. Are any specific controls mentioned in the annual report? What depreciation method does Amazon use for property and equipment? What is the range of useful lives for buildings and for fixtures and equipment? Do these useful lives make sense? Find the heading Goodwill. What type of an asset is goodwill? Does Amazon write off this asset? Explain what the company does.

Explanation / Answer

Amazon may face the following risk,

Specific Controls from Annual report;

Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets (generally the lesser of 40 years or the remaining life of the underlying building, two years for assets such as internal-use software, three years for Amazon.com's servers, five years for networking equipment, five years for furniture and fixtures, and ten years for heavy equipment). Depreciation expense is classified within the corresponding operating expense categories on Amazon.com's consolidated statements of operations.

Amazon had to write down a large chunk of the goodwill.

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