Week 2: Case Discussion: CA4-6 Please read CA 4.6 (Ethics, Classification on Income Statement Items) located in Chapter 4: Income Statement and Related Information, Concepts for Analysis on pages 4-40 of the textbook. Please answer and discuss any two scenarios below. CA4-6 ETHICS (Classification of Income Statement Items) As audit partner for Grupo and Rijo, you are in charge of reviewing the classification of unusual items that have occurred during the current year. The following material items have come to your attention. 1. A merchandising company incorrectly overstated its ending inventory 2 years ago. Inventory for all other periods is correctly computed. 2. An automobile dealer sells for $137,000 an extremely rare 1930 S type Invicta that it purchased for $21,000 10 years ago. The Invicta is the only such display item the dealer owns. 3. A drilling company during the current year extended the estimated useful life of certain drilling equipment from 9 to 15 years. As a result, depreciation for the current year was materially lowered. 4. A retail outlet changed its computation for bad debt expense from 1% to half of 1% of sales because of changes in its customer clientele. 5. A mining company sells a foreign subsidiary engaged in uranium mining, although it (the seller) continues to engage in uranium mining in other countries. SAMSUNG