Conceptual Framework Required: Part One - Catwoman Cat Food Inc. had the scenarios below happen. Indicate if you agree(A) or disagree(D) with the financial reporting practice; then, state the accounting principle, constraint, or underlying assumption applied (if agree) or violated (if disagree). 1. The company adjusted the valuation of all assets and liabilities to reflect changes in the purchasing power of the dollar. 2. The company changed its method of accounting for ingredient exploration costs from successful efforts to full cost. No mention of the change was included in the financial statements. It had a material effect on financial statements. 3. The company purchased machinery having a five-year life. The cost of the machinery is being expensed over the life of the machinery. 4. Equipment was purchased for $180,000 at a liquidation sale. Since it was worth $230,000, they reported it at $230,000 in the Balance Sheet. 5. The company received an order for the sale of 1,000 cases at $100 cach. The customer paid the entire amount of $100,000 on March 15. However, they did not record any revenue until April 17, the date the cases were delivered to the customer. 6. The company purchased two calculators at a cost of $32. The cost was expensed even though they had a three-year estimated useful life. 7. They provided financial statements to external users every three years. or Accounting Principle, Constraint or Assumption AD Required: Part Two - Place the letter next to A List to pair it with its corresponding B List association. List A List B a. Decreases in equity resulting from transfers to owners 1. Predictive value 2. Relevance b. Requires consideration of the costs and value of information 3. Timeliness c. Important for making inter-firm comparisons 4. Distribution to Owners d. Applying the same accounting practices over time 5. Faithful e. Users understand the information in context of the decision being made Representation 6. Comprehensive Income 7. Gain f. Agreement between a measure and phenomenon it purports to represent g. Information is available prior to the decision 8. Confirmatory value 9. Understandability h. Pertinent to the decision at hand i. Implies consensus among different measurers 10. Materiality 11. Comparability 12. Neutrality 13. Realization 14. Consistency 15. Cost effectiveness 16. Verifiability j. Information confirms expectations k. The change in equity from non-owner transactions 1. The process of admitting information into financial statements m. The absence of bias n. Results if an asset is sold for more than its book value o. Information is useful in predicting the future p. Concerns the relative size of an item and its effect on decisions