Lopez Co. had three major business transactions during 2017.
(a) Reported at its fair value of $260,000 merchandise inventory with a cost of $208,000.
(b) The president of Lopez Co., Victor Lopez, purchased a truck for personal use and charged it to his expense account.
(c) Lopez Co. wanted to make its 2017 income look better, so it added 2 more weeks to its income statement reporting period (a 54-week year). Previous years were 52 weeks.
Instructions
In each situation, identify the assumption or principle that has been violated, if any, and discuss what the company should have done.