chapter 10 # 4

Exercise 10-18A (Algo) Ethical Professional Practice LO 10-7 The CFO of the Fanning Microscope Corporation intentionally misclassified a downstream transportation expense in the amount of $667,400 as a product cost in an accounting period when the company made 9,400 microscopes and sold 6,200 microscopes. Fanning rewards its officers with bonuses that are based on net earnings. Required a. Indicate whether the elements on the financlai statements f.e. assets, liabilities. stockholders' equity, tevenue, expense, and net income) would be overstated or understated as a result of the misclassification of the downstream transportation expense. Determine the amount of the overstatement or understatement for each \&lement. (if there is no effect select "Not affected" from the dropdown provided. Enter all answers as positive values.)