(a) Miramar Corporation began operations on January 1, 2020. During the first year, the company reported the following transactions: 1. On January 1, 12,000 common shares were issued at $35 per share. 2. On February 1, Miramar purchased a piece of land and an office building from Azteka Inc. in exchange for $60,000 cash and common shares valued at $150,000. The value of the land is twice the value of the building. Land and the building are reported on separate accounts. 3. On March 31, Miramar rented out part of its office space to a tenant, Cobley company for a monthly rent of $2,500. As a new tenant, Cobley was required to pay rent for 6 months upon signing the rental agreement on March 314 4. On July 1, Miramar purchased equipment. Miramar paid the manufacturer $60,000 cash. In addition, Miramar borrowed 50,000 from its line of credit at BMO bank to finance the transaction. 5. On July 15, the company purchased inventory on account from Spooky Inc. The purchase consisted of 10,000 items at $25 each. 6. On August 1, the company made a sale of $300,000, of which $270,000 was sold on credit. 7. On Sept 1, Miramar made a payment to its suppliers for $210,000 and collected $220,000 of its receivables. 8. On Sept. 30, the company received an invoice for their utilities and paid their utility expense of $4,000 in cash. 9. On October 31, Miramar paid their employees salaries of $17,000 in cash. 10. On December 31, the company declared and paid cash dividends of $59,000 to the shareholders. Assets Shareholder's Equity Liabilities + $100 + $100 # example 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) 1. The qualitative characteristics that increase the usefulness of Miramar's financial information include all of the following, except for a) verifiability b) materiality c) understandability. d) comparability. e) timeliness. 2. When Miramar reports financial information, the benefits must exceed the costs of doing so, according to which characteristic of financial information? a) the concept of materiality b) faithful representation c) cost constraint d) verifiability e) prudence 3. Information that has been determined based on the best information available using the correct process and with an adequate explanation provided is an example of which qualitative characteristic? a) neutral b) faithful representation c) timeliness d) verifiability e) matching 4. Which of the following qualitative characteristics is achieved if Miramar's lender, with sufficient understanding, would arrive at a similar result to that used by the company? a) comparability b) understandability c) timeliness d) verifiability c) relevance