Conceptual Framework:
For each of the following situations, state whether you agree ordisagree with the financial reporting practice employed, and thenbriefly explain the reason and proper treatment if you disagree.Use the conceptual framework as your guide in derivingyour answer.
The controller of the Dumars Corporation increased the carryingvalue of land from its original cost of $2 million to its recentlyappraised value of $3.5 million.
The president of Vosburgh Industries asked the companycontroller to charge miscellaneous expense for the purchase of anautomobile to be used solely for personal use.
At the end of its 2016 fiscal year, Dower, Inc., received anorder from a customer for $45,350. The merchandise will ship earlyin 2017. Because the sale was made to a long-time customer, thecontroller recorded the sale in 2016.
At the beginning of its 2016 fiscal year, Rossi Imports paid$48,000 for a two-year lease on warehouse space. Rossi recorded theexpenditure as an asset to be expensed equally over the two-yearperiod of the lease.
The Reliable Tire Company included a note in its financialstatements that described a pending lawsuit against thecompany.
The Hughes Corporation, a company whose securities are publiclytraded, prepares monthly, quarterly, and annual financialstatements for internal use but disseminates to external users onlythe annual financial statements.
Conceptual Framework:
For each of the following situations, state whether you agree ordisagree with the financial reporting practice employed, and thenbriefly explain the reason and proper treatment if you disagree.Use the conceptual framework as your guide in derivingyour answer.
The controller of the Dumars Corporation increased the carryingvalue of land from its original cost of $2 million to its recentlyappraised value of $3.5 million.
The president of Vosburgh Industries asked the companycontroller to charge miscellaneous expense for the purchase of anautomobile to be used solely for personal use.
At the end of its 2016 fiscal year, Dower, Inc., received anorder from a customer for $45,350. The merchandise will ship earlyin 2017. Because the sale was made to a long-time customer, thecontroller recorded the sale in 2016.
At the beginning of its 2016 fiscal year, Rossi Imports paid$48,000 for a two-year lease on warehouse space. Rossi recorded theexpenditure as an asset to be expensed equally over the two-yearperiod of the lease.
The Reliable Tire Company included a note in its financialstatements that described a pending lawsuit against thecompany.
The Hughes Corporation, a company whose securities are publiclytraded, prepares monthly, quarterly, and annual financialstatements for internal use but disseminates to external users onlythe annual financial statements.
