BuyThings.com (BT) opened its virtual doors in 2013. In the beginning, the company focused on being an online retailer of various products, such as books and video games. The company experienced significant growth during its first five years of operations. Recently, the companys sales have plateaued and management began to seek new sources of revenues. During fiscal 2020, BTs board of directors and the management team developed a new strategic plan to stimulate growth and create shareholder wealth. The strategic plan was finalized in May 2020 and received unanimous board support at a meeting in July 2020. During the most recent fiscal year of 2020, BTs management implemented the strategic plan by moving into two new markets and restructuring activities across three distinct, yet similar, operating segments. BT now seeks to be a customer-focused company across the following three segments: Online retailing: The first segment serves customers through a diverse product and service range from various large brands. For example, BT sells bestselling books, movies, video games, music, and electronic devices. This operating segment focuses on variety of selection, low prices, and home shopping convenience. Content enabling: BT also offers services that enable individuals from across the globe to sell their products on BTs website and to fulfill orders through BTs purchasing information system. This segment focuses on providing high levels of visibility and market reach to musicians, authors, filmmakers, app developers, and other content developers to publish and sell their intellectual property. Electronic device manufacturing: BT manufactures and sells electronic devices. The only device developed and currently for sale is an e-book reader called eReads. Customers can buy eReads and downloadable books through BTs website. In addition, BT began to provide advertising services, such as banner ads, to businesses looking to advertise on BTs website. In order to provide management with an incentive to fully implement the strategic plan and maximize shareholder wealth, the board of directors voted to provide management with a bonus of 5% of 2021 net income if both 2021 revenue and net income experienced growth of 15% over 2020. You are a manager in the internal audit department and are preparing to report to the audit committee on the accounting policies adopted by management during the most recent year. The audit committee is eager to review your report because the strategic plan has resulted in many new, nonroutine transactions. Therefore, the audit committee would like to feel comfortable that the financial statements present fairly the results of operations before the external auditors begin their review. In addition, the audit committee would like to provide information to the compensation committee to help determine the bonus benchmarks that will be used for the management teams 2021 bonus. You begin drafting your report by reviewing draft financial statements (Exhibit I) and summary notes of all of the new transactions related to the new operations (Exhibit II).