Financial & Managerial Accounting 3rd Edition by Charles Horngren,Harrison, Walter,Suzanne Oliver

تمرين 19

The following accounting issues have arisen at T-Shirts Plus, Inc.:
Requirements
1. Corporations sometimes purchase their own stock. When asked why they do so, T-Shirts Plus management responds that the stock is undervalued. What advantage would T-Shirts Plus gain by buying and selling its own undervalued stock
2. T-Shirts Plus earned a significant profit in the year ended December 31, 2012, because land that it held was purchased by the State of Nebraska for a new highway. The company proposes to treat the sale of land as operating revenue. Why do you think the company is proposing this plan Is this disclosure appropriate
3. The treasurer of T-Shirts Plus wants to report a large loss as an extraordinary item because the company produced too much product and cannot sell it. (Under the rules of the lower of cost or market, this situation, in which the net realizable value of inventory is less than the book value, would trigger a write-down of inventory.) Why do you think the treasurer wants to report the loss as extraordinary Would that be acceptable