Description of this paper

briefly explain the accounting principles that have been violated

Description

solution


Question

The following cases relate to the valuation of assets. Consider each case independently.;a. World-Wide Travel Agency has office supplies costing $1,400 on hand at the balance sheet date.;These supplies were purchased from a supplier that does not give cash refunds. World-Wide?s;management believes that the company could sell these supplies for no more than $500 if it;were to advertise them for sale. However, the company expects to use these supplies and to;purchase more when they are gone. In its balance sheet, the supplies were presented at $500.;b. Perez Corporation purchased land in 1957 for $40,000. In 2015, it purchased a similar parcel of;land for $300,000. In its 2015 balance sheet, the company presented these two parcels of land at;a combined amount of $340,000.;c. At December 30, 2015, Felix, Inc., purchased a computer system from a mail-order supplier;for $14,000. The retail value of the system?according to the mail-order supplier?was;$20,000. On January 7, however, the system was stolen during a burglary. In its December 31;2015, balance sheet, Felix showed this computer system at $14,000 and made no reference to;its retail value or to the burglary. The December balance sheet was issued in February 2016.;In each case, indicate the appropriate balance sheet amount of the asset under generally accepted;accounting principles. If the amount assigned by the company is incorrect, briefly explain the;accounting principles that have been violated. If the amount is correct, identify the accounting;principles that justify this amount

 

Paper#24506 | Written in 18-Jul-2015

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