Case Study 5-1 on pages 80-81demonstrates the way professional accountants must use professional judgement when reporting results. Medicine is art and science. "Accounting is more art than science". (Harrison and Harrison, 2013, p.80)

Read the case and discuss the following:

Which of the approaches in the case most accurately reflects the financial operations of the company for their first year of operation?

What are the two different accounting treatments offered? Do you find both acceptable, and why or why not?