1. Intro
2. Conclusion 

Analysis sare with genuine Office today Dr. Garry Morrow owns a private Ontario company Morrow Medical (MM). In accordance to its financial statements, it is perceived that the company uses ASPE (Accounting Standards for Private Enterprises), as its reporting guidelines to produce its financial statements. The prospect of selling MM and determining the sale price being five times the net income raises doubts in regards to the company's financial performance and its influence on valuation. The choice of the management to send additional latex gloves to hospitals raises issues concerning how revenue is being recognized and how inventory is being managed. An evaluation of how this practice affects MM's financial statements is essential. Also, the decision to capitalize expenses related to the Surgical Drill project adheres to accounting standards when specific criteria are met. Auditors should assess if MM's choice to capitalize aligns with these criteria. On-going cashflows challenges, alongside plans to introduce the Surgical's Drill, signify the necessity for vigilant financial oversight and a probable impact on future funding. The legal claim and contingent liability arising from the engineer's injury necessitate detailed examination and disclosure due to the potential substantial impact on MM's financial status. Valuation of MM's Sale: Since the acquisition cost relies on a fivefold multiplier of net income, Dr. Morrow, who manages the company, may be inclined to inflate the 2023 net income to enhance MM's sale profit. However, the prospective buyer has a contrasting incentive. Scrutinize the methodology used to determine MM's selling price. Verify that it is based on reliable financial data, preferably audited financial statements, and a well-defined approach. Confirm the accuracy of the five times net income multiple as of December 31, 2023.