For Each of the Independent Situations Described Below, List the Assumption

question 46

Essay

For each of the independent situations described below, list the assumption, concept, constraint, or recognition criteria that have been violated and describe the appropriate treatment.
1. MacDonald Industrial purchased a piece of land that was listed for $ 150,000. The company worked very hard in negotiations and both parties agreed on a purchase price of $ 139,000. Lawson's accountant has recorded the land on the books at $ 150,000 because she felt this was the most representative fair value at the time of purchase.
2. Chantal's Hair Salon purchases many different hair and cosmetic supplies to be used within the salon and sold to customers. Darlene only has one credit card that she uses to make personal and business purchases. She often gets confused which purchases are for business purposes so she records all credit card transactions through the salon.
3. Buddie's Furniture operates in a small town and often sells on credit without any detailed credit checks. The company sold merchandise to Darcy last year and he failed to pay the amount owing so Buddie wrote off his account. Buddie has recently made another sale to Darcy on credit for $ 12,000 without any security on the transaction. Buddie records all sale transactions once the goods are delivered and title passes.
4. Fancy Diamonds is a Canadian company that reports its financial statements in Canadian dollars. The company often sells its diamonds to customers in the United States and receives U.S. dollars. Fancy records the U.S. dollar amounts within the accounting records without any currency exchange.