zero corporation is being sued for 1 000 000 for breach of contract its lawyers beli 544134 | Homework Solutions

Identify the accounting principle(s) applicable to each of the following situations:

a. Tim Roberts owns a bar and a rental apartment and operates a consulting service. He has separate financial statements for each.

b. An advance collection for magazine subscriptions is reported as a liability titled Unearned Subscriptions.

c. Purchases for office or store equipment for less than $25 are entered in Miscellaneous Expense.

d. A company uses the lower of cost or market for valuation of its inventory.

e. Partially completed television sets are carried at the sum of the cost incurred to date.

f. Land purchased 15 years ago for $40,500 is now worth $346,000. It is still carried on the books at $40,500.

g. Zero Corporation is being sued for $1,000,000 for breach of contract. Its lawyers believe that the damages will be minimal. Zero reports the possible loss in a footnote.