The CFO of the Jordan Microscope Corporation intentionally misclassified a downstream transportation expense in the amount of $575,000 as a

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The CFO of the Jordan Microscope intentionally misclassified a downstream transportation expense in the amount of $575,000 as a product cost in an accounting period when the company made 5,000 microscopes and sold 4,000 microscopes. Jordan rewards its officers with bonuses that are based on net earnings.
Required
a. Indicate whether the elements on the (i.e., assets, liabilities, equity, revenue, 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 element.
b. Based on the provisions of the Sarbanes-Oxley Act, what is the maximum penalty that the CFO could face for deliberately miss representing the Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

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a While the entire 575 000 of transportation cost should have been expensed immediately the …View the full answer

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Question Posted: November 15, 2016 10:08:58

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