The mission of the U.S. Securities Exchange Commission (SEC) is to protect the company investors, to maintain orderly, fair and efficient markets and ensure the facilitation of capital formation (sec.gov, 2011).
When companies do not disclose the vital information on inventory, their financial results are most likely to be improved artificially and profits overstated when these are sold (Krantz, 2001). The Micron Technology and JDS Uniphase are technology companies though and this is one unique sector which changes really fast. With this view in mind, the worthless inventory is most unlikely to be of much worth in the future as past technologies tend to be obsolete with time. This not only reduces and restricts the likely selling price but even more, limits the likelihood of chances of selling the inventory within this sector. As it is with unpredictable circumstances, the companies should share this information with SEC and let it be known to its investor (Bhiman, 2006).
The inventory information is essential to the investors. Without this information the investors face problems in determining whether the profits were generated by the business or as a result of accounting. It is essential for the investors to know when the selling of the written off inventory would distort the earnings of the company in order for them to appropriately be able to value the company (Krantz, 2001). Sharing the information with the investors is of paramount importance.
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