Case 1- Justin Chan is very excited about starting his part-time landscaping service. As a senior...

  

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Case 1- Justin Chan is very excited about starting his part-time landscaping service. As a senior high school student, he has studied some accounting and has included the following two assets on his beginning balance sheet: Lawn mowers $160 Pick-up truck $1000 Justin purchased the two lawn mowers at a local flea market for $20 each but feels that he got a very good deal and that they are worth at least $80 each. The old pick-up truck was a gift from his'uncle. Justin thinks he has seen similar trucks advertised in Autotrader for about $2000. Justin would like his balance sheet to be accurate and to follow accounting standards and principles. 1. Which 2 accounting standards and principles did Justin violate on his balance sheet? Explain. 2. How should he correct his 2 mistakes? 3. How can an accurate balance sheet value for the truck be determined? 4. How would an overstatement of Justin's assets affect his capital on the balance sheet? Case 1- Justin Chan is very excited about starting his part-time landscaping service. As a senior high school student, he has studied some accounting and has included the following two assets on his beginning balance sheet: Lawn mowers $160 Pick-up truck $1000 Justin purchased the two lawn mowers at a local flea market for $20 each but feels that he got a very good deal and that they are worth at least $80 each. The old pick-up truck was a gift from his'uncle. Justin thinks he has seen similar trucks advertised in Autotrader for about $2000. Justin would like his balance sheet to be accurate and to follow accounting standards and principles. 1. Which 2 accounting standards and principles did Justin violate on his balance sheet? Explain. 2. How should he correct his 2 mistakes? 3. How can an accurate balance sheet value for the truck be determined? 4. How would an overstatement of Justin's assets affect his capital on the balance sheet?

Answer rating: 100% (QA)

1 Which 2 accounting standards and principles did Justin violate on his balance sheet IAS 16 Propert... View the full answer