The following is the complete set of financial statements prepared by Oberlin Corporation:

Notes to Financial Statements
1. Goodwill is not being reviewed for impairment. The goodwill was €œacquired€ in 2007.
2. The amount, Due to Grant, Inc., is contingent upon the outcome of a lawsuit, which is currently pending. The amount of loss, if any, is not expected to exceed $300,000.

Required
Identify and explain the deficiencies in the presentation of Oberlin€™s financial statements. There are no arithmetic errors in the statements. Organize your answer as follows:
1. Deficiencies in the statement of earnings and retained earnings
2. Deficiencies in the statement of financial position
3. General comments
If an item appears on both statements, identify the deficiencies for each statementseparately.

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OBERLIN CORPORATION Statement of Earnings and Retained Earnings For the Fiscal Year Ended August 31, 2007 3,500,000 3,465,000 1.039.000 1,000,000 1,079.000 Ceneral and administrative expenses (Note I) 10,000 00,000 200,000 Correction of error in last years statement Add extraordinary item-gain on sale of fixed asset Dividends ( 12% stock dividend declared but not yet issued) Contingent liability (Note 3) Statement ot Financial Position t 31, 200 $320,000 $4,000,000 1,668,000 Investments in real cstate (current valuc) S 160,000 300,000 Bonds payable (including porion due within one year) $1,000,000 Paid in capital in excess of par Total stockholders equity 3.892.000