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Principles of Financial Aceounting: Service and Merchandlising Business 17 2 For each of the following mini-scenarios, idenity the major GAAP or Assumption involved. Then indicate the proper handling of the situation. (Please nobe: There may be more than one principle involved.) a. A firm purchases a building for $200,000. Two years later an appraiser values the same building at $250,000. The owner of the firm wants the balance sheet to reflect the new value. b. The proprietor of a newly founded firm transfers some of his personal items, such as his desk, 3-year-old computer system, five-year-old car, enc to the firms bases the values of the objects on the prices he presently finds in retail stores for equivalent itens December 15, an engineering firm signed a contract with a dient to develop plans for the building of a bridge. The contract value amounts to $24,000. The actual work on the plans did not start until the holidays had ended. The owner instructs the accountant to show 90% of the contract value as ncome on the income statement d. ABC Ltd. entered a lease agreement in a shopping mall on October 1 for 12 months, costing $24,000. Of this figure, $12,000 had to be paid immediately and the rest six months later. The newly hired bookkeeper recorded the transaction as follows. No further actions were taken in this matter DATE PARTICULAR S DE CREDIT October1 Rent Expense 2s year s rent paid e. XYZ Inc, has found out that its main office building, listed as $200,000 on the company's balance sheet, is situated on contaminated soil and needs to be destroyed or removed in order to fulfill legal obligations to company employees The financial reports are slated to be published a week hence. f. Mr. Buns, the sole owner of a proprietorship, bought himself a new camper trailer to use for his family's vacations. Since he used the money earned from his business, he records the transaction as follows: Ref. DEBIT CREDIT PARTICULARS 16,000 15 T March 8,000 8,000 Bank Bank loun Bou ht new camper trailer