The following information is for Brittany, Inc.
1. To be more concise, the company decided that only net income should be reported on the income statement.
Details on revenues, cost of goods sold, and expenses were also omitted from the notes.
2. Equipment purchases of $270,000 were partly financed during the year by issuing a $1 10,000 note payable. The company offset the equipment against the note payable and reported plant assets at $ 160,000. No information has been provided in the notes.
3. During the year, an assistant controller for the company embezzled $50,000. Brittany's net income for the year was $2.3 million. Neither the assistant controller nor the money has been found. No information has been provided in the notes.
4. Brittany has reported its ending inventory at S2 .7 million in the financial statements. No other information on inventories is presented in the financial statements and related notes.
5. The company changed its method of amortizing equipment from the double-declining balance to the straight-line method. This change is not mentioned anywhere in the financial statements.
Instructions
(a) Explain the meaning and implications of the full disclosure principle and how such information may be provided to users.
(b) For each of the situations above, discuss whether Brittany has followed acceptable accounting and disclosure practices.