For each of the following situations, indicate whether the financial reporting practice employed is line with GAAP or not.

ALSO, state the basic assumption, component, or accounting principle that is applied (if it follows GAAP) or violated (if it does NOT follow GAAP).

1.Brown Corporation adjusted the valuation of all assets and liabilities to reflect changes in the purchasing power of the dollar.

2.OReilly Oil Company changed its method of accounting for oil and gas exploration costs from successful efforts to full cost. No mention of the change was included in the financial statements. The change had a material effect on Spooner's financial statements.

3.Reich Manufacturing Company purchased machinery having a five-year life. The cost of the machinery is being expensed over the life of the machinery.

4.Shea Corporation purchased equipment for $180,000 at a liquidation sale of a competitor. Because the equipment was worth $230,000, Shea valued the equipment in its balance sheet at $230,000.

5.Barnes Bicycle Company received a large order for the sale of 1,000 bicycles at $100 each. The customer paid Davis the entire amount of $100,000 on March 15. However, Barnes did not record any revenue until April 17, the date the bicycles were delivered to the customer.

6.Mega Corporation purchased two small calculators at a cost of $32.00. The cost of the calculators was expensed even though they had a three-year estimated useful life.

7.Laforge Company provides financial statements to external users every three years.

8.The president of Grech Industries asked the company controller to charge miscellaneous expense for the purchase of an automobile to be used solely for personal use.

9.At the end of its 2018 fiscal year, Dodds, Inc., received an order from a customer for $45,350. The merchandise will ship early in 2019. Because the sale was made to a long-time customer, the controller recorded the sale in 2018.

10.At the beginning of its 2018 fiscal year, Starr Imports paid $48,000 for a two-year lease on warehouse space. Starr recorded the expenditure as an asset to be expensed equally over the two-year period of the lease.

11.The Troenkrasnow Tire Company included a note in its financial statements that described a pending lawsuit against the company.

12.The Kononov Corporation, a company whose securities are publicly traded, prepares monthly, quarterly, and annual financial statements for internal use but disseminates to external users only the annual financial statements.