4) For each of the following situations, state whether you agree or disagree with the financial reporting practice employed, and briefly explain the reason for your answer. Cantor Corporation's accountant increased the book value of a patent from its original cost of $1 million to its recently appraised value of $6 million. Stanton Corporation paid for the personal travel of its chief financial officer and charged travel expense. At the end of its 2021 fiscal year, Dower, Inc., received an order from a customer for $60,000. The merchandise will ship early in 2022. Because the sale was made to a long-time customer and the invoice was paid in 2021, the controller recorded the sale in 2021. In the middle of its 2021 fiscal year, Sanguinetti, Inc. paid $12,000 to its insurance company for one-year comprehensive insurance coverage. Sanguinetti recorded the entire expenditure as an expense in 2021. The Churchill Pharmaceutical Company included a note in its financial statements that described a pending lawsuit against the company. The Daily Corporation, a company whose securities are publicly traded, prepares monthly, quarterly, and annual financial statements for internal use but disseminates to external users only the annual financial statements. Answer Agree or disagree and the reason.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 50P

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4) For each of the following situations, state whether you agree or disagree with the financial reporting practice employed, and briefly explain the reason for your answer.

Cantor Corporation's accountant increased the book value of a patent from its original cost of $1 million to its recently appraised value of $6 million.
Stanton Corporation paid for the personal travel of its chief financial officer and charged travel expense.
At the end of its 2021 fiscal year, Dower, Inc., received an order from a customer for $60,000. The merchandise will ship early in 2022. Because the sale was made to a long-time customer and the invoice was paid in 2021, the controller recorded the sale in 2021.
In the middle of its 2021 fiscal year, Sanguinetti, Inc. paid $12,000 to its insurance company for one-year comprehensive insurance coverage. Sanguinetti recorded the entire expenditure as an expense in 2021.
The Churchill Pharmaceutical Company included a note in its financial statements that described a pending lawsuit against the company.
The Daily Corporation, a company whose securities are publicly traded, prepares monthly, quarterly, and annual financial statements for internal use but disseminates to external users only the annual financial statements.

Answer Agree or disagree and the reason.

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