2/2 Question 1. Identify which basic principle of accounting is best described in each of the following items: (20 points) a. Neptun Co. reports revenue in its income statement when it delivers goods instead of when the cash is collected. (5 points) b. KDD Company recognizes depreciation expense for a machine over the 2-year period during which that machine helps the company earn revenue. (5 points) C. Alfa Co. reports information about pending lawsuits in the notes to its financial statements. (5 points) d. Adidas reports land on its statement of financial position at the amount paid to acquire it, even though the estimated fair value is greater. (5 points) Question 2. Presented below is information related to Wall sh.p.k (amounts in thousands) (80 points) Interest revenue 56,000 Sales revenue 1,200,000 Sales returns and allowances 130,000 Sales discounts 34.000 Cost of goods sold 600,000 Selling expenses 150,000 Administrative and general expenses 67,000 Interest expense 40,000 Gain from sale of equipment 80,000 Loss from sale of a division 20,000 Dividends paid on preferred shares 12,000 Assume the total effective tax rate on all items is 10%. 100,000 ordinary shares were outstanding during the year Required Prepare an Income Statement. (80 points)