1. Due to the ongoing Dos Equis Virus pandemic, the sale price of their N95 masks went up. 3MMMs company executives decided to mark up their inventory of N95 masks to reflect the increased value of their inventory. Are they acting in accordance of US GAAP? Why or why not?
2. Tai Corp discontinued their tea division in 2020. The division made an operational loss of $2 million in 2020, and their assets were sold at a net loss of $1 million. The firm incurred a $500,000 cost on severance pay and retraining their employees for different functions. Tai Corp included the $500,000 cost on their 2020 income statement as part of their operational expenses. Are they acting in accordance of US GAAP? Why or why not?
3. Gumdrop spent $2 million in 2020 on a customer service course for all of its employees, and the customer reviews went up from a 3 star average to a 4.5 star average. Gumdrop records this expenditure of $2 million under the goodwill account, since the expenditure has improved the brand equity of the firm. Are they acting in accordance of US GAAP? Why or why not?