The CFO of the Rigney Microscope Corporation intentionally miscl

The CFO of the Rigney Microscope Corporation intentionally misclassified a downstream transportation expense in the amount of $67,500,000 as a product cost in an accounting period when the company made 12,000 microscopes and sold 7,000 microscopes. Rigney rewards its officers with bonuses that are based on net earnings.
a. Indicate whether the elements on the financial statements (i.e., assets, liabilities, equity, revenue, expense, and net income) would be overstated or understated as a result of the misclassification of the upstream research and development 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 misrepresenting the financial statements?

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...
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...


  • Access to 2 Million+ Textbook solutions
  • Ask any question from 24/7 available



Get help from Managerial Accounting Tutors
Ask questions directly from Qualified Online Managerial Accounting Tutors .
Best for online homework assistance.