State your position on each item and give theoretical support in each situation.

1. In as much as profit for the year appears to be extremely small, no depreciation is recorded for the year.

2. An amount paid for an advertising campaign to promote a new product that will be placed on the market in the following year is charged to prepaid advertising.

3. The entire cost of leasehold improvement is to be charged to an expense account.

4. No entry is made when a storm surge destroyed a considerable amount of uninsured inventory.

5. Goods with measurable cost have become obsolete. The goods are included as part of the inventory since no loss