It’s a week before Frogbox’s October 31, 2020, year-end. You are the personnel director and are reviewing some financial information regarding the March 1, 2018, purchase of office furniture for the Western Region offices totalling $700,000 ($300,000 was paid in cash and the balance was financed over four years at 4% annual interest with annual principal payments of $100,000). The useful life of the furniture was estimated to be five years with a projected resale value at that time of $20,000. Insurance was purchased on the furniture at a cost of $8,000 annually, payable each March 1. You leave the office for the day wondering what needs to be considered regarding these items in preparation for year-end.

Required

1. Identify the relevant facts.

2. Describe what principles need to be considered.

3. Outline the goal of financial reporting.

4. Recommend an appropriate accounting policy and describe the impact to the year-end financial statements.