Which of the following items would most likely be a violation of the materiality constraint?
A) A company did not separately report an unusual gain of $100,000. Its income from operations was $20,000,000.
B) A company having reported total assets of $50,000,000 immediately expensed the purchase of 20 pencil sharpeners that have an estimated useful life of three years.
C) A $75,000 illegal bribe by an executive of the company to a foreign official was not separately disclosed in the annual report.
D) A $2,000 expenditure to improve a building that originally cost $10,000,000 was immediately expensed.

Question

Quizplus · Accepted Answer

C) A $75,000 illegal bribe by an executive of the company to a foreign official was not separately disclosed in the annual report. This is a significant ethical and legal issue that impacts the integrity and reputation of the company, making it material regardless of the amount relative to the company's financial position.

Which of the Following Items Would Most Likely Be a Violation