A. Indicate if the item is acceptable or violates GAAP. B. Indicate what theory is most...

 

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A. Indicate if the item is acceptable or violates GAAP. B. Indicate what theory is most directly involved. If more than one is closely involved then indicate that it is relevant too. 1. Arthur Debit, the controller, decides that issuance of this year's financial statements are unnecessary as the results are substantially the same as last year. 2. Consolidated financial statements are prepared for a parent company and its three subsidiary companies. Each company is a separate legal business. 3 Northam Inc. leased office space on a two year operating lease. Both first and last month's rent were paid in the current fiscal year. All payments were recorded as an asset. 4. Land was purchased at a tax auction for $600 as the prior owner had not paid the property taxes. The current market value of the land is $20,000 so the controller made the following entry: Land $20,00 Cash Gain from Market Value $ 600 $19,400 5 McLaren Company expensed all office equipment purchases under $500 at the time of purchase. The average life of the office equipment was five years. The total amount of this type of transaction was $240,000. This amount equaled 40% of the recorded balance of office equipment. 6. Disbursements for insurance coverage that will apply to next year were recorded in an expense account. A. Indicate if the item is acceptable or violates GAAP. B. Indicate what theory is most directly involved. If more than one is closely involved then indicate that it is relevant too. 1. Arthur Debit, the controller, decides that issuance of this year's financial statements are unnecessary as the results are substantially the same as last year. 2. Consolidated financial statements are prepared for a parent company and its three subsidiary companies. Each company is a separate legal business. 3 Northam Inc. leased office space on a two year operating lease. Both first and last month's rent were paid in the current fiscal year. All payments were recorded as an asset. 4. Land was purchased at a tax auction for $600 as the prior owner had not paid the property taxes. The current market value of the land is $20,000 so the controller made the following entry: Land $20,00 Cash Gain from Market Value $ 600 $19,400 5 McLaren Company expensed all office equipment purchases under $500 at the time of purchase. The average life of the office equipment was five years. The total amount of this type of transaction was $240,000. This amount equaled 40% of the recorded balance of office equipment. 6. Disbursements for insurance coverage that will apply to next year were recorded in an expense account.

Answer rating: 100% (QA)

1 This item is acceptable as the financial statements are not issued This should be becauseThe accounting standards currently in effect are expected t... View the full answer