The following excerpt was taken from the President's letter to the shareholders in CV Technology's 2007 Annual

Question:

The following excerpt was taken from the President's letter to the shareholders in
CV Technology's 2007 Annual Report:
In the fall of 2006, encouraged by enthusiasm from American retailers, we launched COLD-fX ® in the U.S. In the face of unexpectedly high return rates from U.S. retailers, we announced on April 11, 2007 that we would restate our financial results, due to a reconsideration of the way we apply our revenue recognition policy. As a result of our announcement, Securities Commissions in Alberta, British Columbia, and Ontario issued interim trading halts on our shares. After restated financials were released, trading in the shares resumed on July 11, 2007.
Required
1. Why is it important that this type of information be disclosed?
2. Suppose you are the chief financial officer (CFO) responsible for the of CV Technologies. What ethical issues would you face as you consider what to report in the 2007 Annual Report?
3. What are the negative consequences to CV Technologies of not telling the truth? What are the negative consequences to CV Technologies of telling the truth?
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...