On-the-Crest Ltd. (OCL) is a company operating in the used-vehicle industry. OCL derives its revenue from selling, licensing, and servicing software products for car dealers, from the sale of products to car dealers, and from the sale of used vehicles. Both through internal growth and acquisitions, OCL revenue has grown at the rate of \(25 \%\) per year for each of the last five years. An initial public offering is planned in the next fiscal year.

Ida Wong, the audit partner, is seeking a summary memo from the senior in charge of the audit. Ida has a meeting scheduled with Bill Valarian, CFO of OCL, tomorrow and needs to be aware of major reporting issues.

Required:

Review the notes and prepare a memo outlining accounting and reporting issues and alternatives. This memo will be the basis for the meeting with Bill Valarian.