Gordon is the majority owner of Gordon House Restaurant $($GHR$),$ a publicly traded chain of family restaurants. GHR has adopted ASPE for recording accounting transactions. The company is owned by hundreds of shareholders who expect timely, reliable and accurate financial statements. GHR produces financial statements periodically.

Itis now June $15,2021.$ The accountant has prepared the financial statements for the eight$-$month period ended May $31,$

$2021.$ The previous financial statements covered a one$-$year period.

HR was recently sued by another company, the details of which are not disclosed in the financial statements. The court proceedings have not yet ended. However, as of May $31,2021,$ it was believed that GHR was very likely to lose the case and would eventually have to pay a significant amount in damages to the plaintiff.

Also consider the following information:

$$Cash disbursements are not supported by additional source documents

$$GHR has recognized revenue in a different accounting period from that in which the costs associated with producing that revenue were recognized

Required

a$)$ Which of the qualitative characteristics of financial information has HR failed to apply? Explain.

b$)$ Which ofthe financial statement foundations has GHRViolated? Explain.

c$)$ Based on the information provided, should GHR have adopted ASPE or IFS? Explain.

$4)$ Who would be the internal or external users of GHR$\text{'}$s fnancial information?