Which GAAP assumption, principle, or constraint most appropriately justifies these procedures and practices? Intangible assets are capitalized and amortized over periods benefited. Expense recognition Full disclosure All significant corporate events occurring after the balance sheet date, but before the annual report is issued are reported. The rationale for accrual accounting is stated. (Do not use revenue recognition or expense recognition.) An allowance for doubtful accounts is established to write down the value of accounts receivable to the value actually expected to be collected. Monetary unit X Conservatism Goodwill (the excess of the purchase price over the fair value of assets and liabilities acquired) is recorded only at the time of purchase of another company, Measurement Repair tools are expensed when purchased instead of recorded as assets and depreciated. Cost (as in cost/benefit) Revenue is generally recorded at the point of sale. Revenue recognition The use of consolidated financial statements, which include majority-owned subsidiaries, is justified Economic entity Which GAAP assumption, principle or constraint has been violated in the situations below? The president of XYZ, Inc.used his expense account to purchase a new SUV solely for personal use and recorded the purchase as miscellaneous expense in XYZ's records Monetary unit Measurement (historical cost) Full disclosure + Because of a "fire sale," equipment obviously worth $200,000 was acquired at a cost of $155,000. The acquiring company decreased the cash account by $155,000, increased the equipment account by $200,000, and recorded $45,000 as sales revenue. XYZ, Inc. has been concerned about whether intangible assets could generate cash in case of liquidation. As a consequence, goodwill arising from a purchase transaction during the current year and recorded at $800,000 was written off with a decrease to Retained Earnings. The company is being sued for $500,000 by a customer who claims damages for personal injury apparently caused by a defective product. Company attorneys feel extremely confident that the company will have no liability for damages resulting from the situation. Nevertheless, the company records a loss and corresponding liability of $500,000. Because the general level of prices increased during the current year, XYZ, Inc. determined that there was a $16,000 understatement of depreciation expense on its equipment and decided to increase its expenses accordingly, Periodicity Going concern