1) Manatee Corporation manufactures calculators. The owner of the Company Manatee Collins has taken the decision to open a retail shop to sell calculators as well as other supplies which they will purchase from other suppliers. She is considering to apply conventional retail inventory method for the valuation of her inventory and has contacted a professional accountant for information about the conventional retail method of pricing inventories at the retail shop.

Instruction:

response from the perspective of the professional accountant to Manatee Collins, the owner of the business explaining the retail method of pricing inventories focusing on the issues like the definition and accounting features of the conventional retail inventory method, the situations that may falsify the results under this method, a comparative analysis of the advantages of using the retail method with those of using cost methods or other popular methods of inventory pricing, the accounting theory which underlies the treatment of net markdowns and net markups under this method etc.

2) Eastwood Corporation signed a long-term purchase contract to buy timber from the Viena. Forest Service at $500 per thousand board feet in 2019. According to the terms and condition of the agreement, Eastwood must cut and pay $10,000,000 for this timber during 2020. Currently, the fair value is $430 per thousand board feet. At this rate, the market price is $8,600,000. Pittman Bob, the controller, wants to diagnose the loss in value on the financial statements at the end of the year. However the CFO, James Collins, thinks that the loss is momentary and argued that it should be ignored. Nonetheless, Pittman countered that market value has remained near $430 since a long time, and he thinks that no foreseeable change will occur.

Instruction

report taking a clear position in this conflict. Give reasons in your support. Are there any ethical issues involved? Will any particular stakeholder be harmed in the process? Explain briefly.

3) Opra Valley, owner of a small manufacturing company has contacted a professional accountant, about the 2019 costs her factory has incurred. She is particularly concerned about "depreciation expense." According to her the condition of the factory equipment is excellent. She has always been very watchful about keeping all equipment well maintained and well oiled. According to him, it's entirely wrong and unethical to charge such a huge amount as depreciation against revenue. Moreover, it does not reveal the cost of slight wear and tear that the equipment have experienced over the last year. They were using double-declining balance method to depreciate all their equipment since January 1, 2019. In total they have 3 equipment having a cost of $ 350,000 each, a salvage value of $30,000 each and a useful life of 10 years each.

According to Opra, if they use straight line method, their depreciation expense will come down.

Instructionse- response to clear up the confusion of Opra Valley regarding the term depreciation and address her concerns. Besides, calculate year-1 depreciation on all machines under both methods. Moreover give the theoretical justification that underlies double-declining-balance and also explain why, in the long run, the accumulated depreciation will be same under both methods.