Question 1: Read the Analysis case study then answer the questions below it.

Question 2: Assignment 330 consists of a number of question that areHighlighted as follows:

• A) BE2-2,BE2-4,BE2-6
• B) E2-2,E2-4,E2-6
• Read the questions then answer them correctly and make sure there are NO grammatical errors.

\fThe treasurer of Landowska Co. has heard that conservatism is a doctrine that is followed in accounting and, therefore, proposes that several policies be followed that are conservative in nature. State your opinion with respect to each of the policies listed. (a) The company gives a 2year warranty to its customers on all products sold. The estimated warranty costs incurred from this year's sales should be entered as an expense this year instead of an expense in the period in the future when the warranty is made good. (b) When sales are made on account, there is always uncertainty about whether the accounts are collectible. Therefore, the treasurer recommends recording the sale when the cash is received from the customers. (c) A personal liability lawsuit is pending against the company. The treasurer believes there is an even chance that the company will lose the suit and have to pay damages of $200,000 to $300,000. The treasurer recommends that a loss be recorded and a liability created in the amount of $300,000. BRIEF EXERCISES BE21. (LO 3) Match the qualitative characteristics below with the following statements. 1.Relevance 2.Faithful representation 3.Predictive value 4.Confirmatory value 5.Comparability 6.Completeness 7.Neutrality 8.Timeliness (a) Quality of information that permits users to identify similarities in and differences between two sets of economic phenomena. (b) Having information available to users before it loses its capacity to influence decisions. (c) Information about an economic phenomenon that has value as an input to the processes used by capital providers to form their own expectations about the future. (d) Information that is capable of making a difference in the decisions of users in their capacity as capital providers. (e) Absence of bias intended to attain a predetermined result or to induce a particular behavior. BE22. (LO 3) Match the qualitative characteristics below with the following statements. 1.Timeliness 2.Completeness 3.Free from error 4.Understandability 5.Faithful representation 6.Relevance 7.Neutrality 8.Confirmatory value (a) Quality of information that assures users that information represents the economic phenomena that it purports to represent. (b) Information about an economic phenomenon that corrects past or present expectations based on previous evaluations. (c) The extent to which information is accurate in representing the economic substance of a transaction. (d) Includes all the information that is necessary for a faithful representation of the economic phenomena that it purports to represent. (e) Quality of information that allows users to comprehend its meaning. BE23. (LO 3) Discuss whether the changes described in each of the cases below require recognition in the CPA's audit report as to consistency. (Assume that the amounts are material.) (a) The company changed its inventory method to FIFO from weightedaverage, which had been used in prior years. (b) The company disposed of one of the two subsidiaries that had been included in its consolidated statements for prior years. (c) The estimated remaining useful life of plant property was reduced because of obsolescence. BE24. (LO 3) Identify which qualitative characteristic of accounting information is best described in each item below. (Do not use relevance and faithful representation.) (a) The annual reports of Best Buy Co. are audited by certified public accountants. (b) Black & Decker and Cannondale Corporation both use the FIFO cost flow assumption. (c) Starbucks Corporation has used straightline depreciation since it began operations. (d) Motorola issues its quarterly reports immediately after each quarter ends. BE25. (LO 3) Presented below are three different transactions related to materiality. Explain whether you would classify these transactions as material. (a) Blair Co. has reported a positive trend in earnings over the last 3 years. In the current year, it reduces its bad debt allowance to ensure another positive earnings year. The impact of this adjustment is equal to 3% of net income. (b) Hindi Co. has an unusual gain of $3.1 million on the sale of plant assets and a $3.3 million loss on the sale of investments. It decides to net the gain and loss because the net effect is considered immaterial. Hindi Co.'s income for the current year was $10 million. (c) Damon Co. expenses all capital equipment under $25,000 on the basis that it is immaterial. The company has followed this practice for a number of years. BE26. (LO 4) For each item below, indicate to which category of elements of financial statements it belongs. (a) Retained earnings (b) Sales (c) Additional paidin capital (d) Inventory (e) Depreciation (f) Loss on sale of equipment (g) Interest payable (h) Dividends (i) Gain on sale of investment (j) Issuance of common stock BE27. (LO 4) Explain how you would decide whether to record each of the following expenditures as an asset or an expense. Assume all items are material. (a) Legal fees paid in connection with the purchase of land are $1,500. (b) Eduardo, Inc. paves the driveway leading to the office building at a cost of $21,000. (c) A meat market purchases a meatgrinding machine at a cost of $3,500. (d) On June 30, Monroe and Meno, medical doctors, pay 6 months' office rent to cover the month of July and the next 5 months. (e) Smith's Hardware Company pays $9,000 in wages to laborers for construction on a building to be used in the business. (f) Alvarez's Florists pays wages of $2,100 for the month to an employee who serves as driver of their delivery truck. BE28. (LO 5) Identify which basic assumption of accounting is best described in each item below. (a) The economic activities of FedEx Corporation are divided into 12month periods for the purpose of issuing annual reports. (b) Solectron Corporation, Inc. does not adjust amounts in its financial statements for the effects of inflation. (c) Walgreen Co. reports current and noncurrent classifications in its balance sheet. (d) The economic activities of General Electric and its subsidiaries are merged for accounting and reporting purposes. Target was involved in litigation over the last year. This litigation is disclosed in the financial statements. (b) Target allocates the cost of its depreciable assets over the life it expects to receive revenue from these assets. (c) Target records the purchase of a new Dell PC at its cash equivalent price. EXERCISES E21. (Usefulness, Objective of Financial Reporting) (LO 1, 2) Indicate whether the following statements about the conceptual framework are true or false. If false, provide a brief explanation supporting your position. (a)Accounting rulemaking that relies on a body of concepts will result in useful and consistent pronouncements. (b)Generalpurpose financial reports are most useful to company insiders in making strategic business decisions. (c)Accounting standards based on individual conceptual frameworks generally will result in consistent and comparable accounting reports. (d)Capital providers are the only users who benefit from generalpurpose financial reporting. (e)Accounting reports should be developed so that users without knowledge of economics and business can become informed about the financial results of a company. (f)The objective of financial reporting is the foundation from which the other aspects of the framework logically result. E22. (Usefulness, Objective of Financial Reporting, Qualitative Characteristics) (LO 1, 2, 3) Indicate whether the following statements about the conceptual framework are true or false. If false, provide a brief explanation supporting your position. (a)The fundamental qualitative characteristics that make accounting information useful are relevance and verifiability. (b)Relevant information only has predictive value, confirmatory value, or both. (c)Information that is a faithful representation is characterized as having predictive or confirmatory value. (d)Comparability pertains only to the reporting of information in a similar manner for different companies. (e)Verifiability is solely an enhancing characteristic for faithful representation. (f)In preparing financial reports, it is assumed that users of the reports have reasonable knowledge of business and economic activities. E23. (Qualitative Characteristics) (LO 3, 7) SFAC No. 8 identifies the qualitative characteristics that make accounting information useful. Presented below are a number of questions related to these qualitative characteristics and underlying constraint. (a)What is the quality of information that enables users to confirm or correct prior expectations? (b)Identify the pervasive constraint developed in the conceptual framework. (c)The chairman of the SEC at one time noted, \"If it becomes accepted or expected that accounting principles are determined or modified in order to secure purposes other than economic measurement, we assume a grave risk that confidence in the credibility of our financial information system will be undermined.\" Which qualitative characteristic of accounting information should ensure that such a situation will not occur? (Do not use faithful representation.) (d)Muruyama Corp. switches from FIFO to averagecost to FIFO over a 2year period. Which qualitative characteristic of accounting information is not followed? (e)Assume that the profession permits the savings and loan industry to defer losses on investments it sells because immediate recognition of the loss may have adverse economic consequences on the industry. Which qualitative characteristic of accounting information is not followed? (Do not use relevance or faithful representation.) (f)What are the two fundamental qualities that make accounting information useful for decisionmaking? (g)Watteau Inc. does not issue its firstquarter report until after the second quarter's results are reported. Which qualitative characteristic of accounting is not followed? (Do not use relevance.) (h)Predictive value is an ingredient of which of the two fundamental qualities that make accounting information useful for decisionmaking purposes? (i)Duggan, Inc. is the only company in its industry to depreciate its plant assets on a straightline basis. Which qualitative characteristic of accounting information may not be followed? (j)Roddick Company has attempted to determine the replacement cost of its inventory. Three different appraisers arrive at substantially different amounts for this value. The president, nevertheless, decides to report the middle value for external reporting purposes. Which qualitative characteristic of information is lacking in these data? (Do not use relevance or faithful representation.) E24. (Qualitative Characteristics) (LO 3) The qualitative characteristics that make accounting information useful for decisionmaking purposes are as follows. Relevance Neutrality Verifiability Faithful representationCompletenessUnderstandability Predictive value Timeliness Comparability Confirmatory value Materiality Free from error Instructions Identify the appropriate qualitative characteristic(s) to be used given the information provided below. (a) Qualitative characteristic being employed when companies in the same industry are using the same accounting principles. (b) Quality of information that confirms users' earlier expectations. (c) Imperative for providing comparisons of a company from period to period. (d) Ignores the economic consequences of a standard or rule. (e) Requires a high degree of consensus among individuals on a given measurement. (f) Predictive value is an ingredient of this fundamental quality of information. (g) Four qualitative characteristics that are related to both relevance and faithful representation. (h) An item is not recorded because its effect on income would not change a decision. (i) Neutrality is an ingredient of this fundamental quality of accounting information. (j) Two fundamental qualities that make accounting information useful for decisionmaking purposes. (k) Issuance of interim reports is an example of what enhancing quality of relevance? E25. (Elements of Financial Statements) (LO 4) Ten interrelated elements that are most directly related to measuring the performance and financial status of an enterprise are provided below. Assets Distributions to owners Expenses Liabilities Comprehensive incomeGains Equity Revenues Losses Investments by owners Instructions Identify the element or elements associated with the 12 items below. (a) Arises from peripheral or incidental transactions. (b) Obligation to transfer resources arising from a past transaction. (c) Increases ownership interest. (d) Declares and pays cash dividends to owners. (e) Increases in net assets in a period from nonowner sources. (f) Items characterized by service potential or future economic benefit. (g) Equals increase in assets less liabilities during the year, after adding distributions to owners and subtracting investments by owners. (h) Arises from income statement activities that constitute the entity's ongoing major or central operations. (i) Residual interest in the assets of the enterprise after deducting its liabilities. (j) Increases assets during a period through sale of product. (k) Decreases assets during the period by purchasing the company's own stock. (l) Includes all changes in equity during the period, except those resulting from investments by owners and distributions to owners. E26. (Assumptions, Principles, and Constraint) (LO 5, 6) Presented below are the assumptions, principles, and constraint used in this chapter. 1.Economic entity assumption 2.Going concern assumption 3.Monetary unit assumption 4.Periodicity assumption 5.Measurement principle (historical cost) 6.Measurement principle (fair value) 7.Expense recognition principle 8.Full disclosure principle 9.Cost constraint 10.Revenue recognition principle Instructions Identify by number the accounting assumption, principle, or constraint that describes each situation below. Do not use a number more than once. (a) Allocates expenses to revenues in the proper period. (b) Indicates that fair value changes subsequent to purchase are not recorded in the accounts. (Do not use revenue recognition principle.) (c) Ensures that all relevant financial information is reported. (d) Rationale why plant assets are not reported at liquidation value. (Do not use historical cost principle.) (e) Indicates that personal and business record keeping should be separately maintained. (f) Separates financial information into time periods for reporting purposes. (g) Assumes that the dollar is the \"measuring stick\" used to report on financial performance. E27. (Assumptions, Principles, and Constraint) (LO 5, 6) Presented below are a number of operational guidelines and practices that have developed over time. Instructions Select the assumption, principle, or constraint that most appropriately justifies these procedures and practices. (Do not use qualitative characteristics.) (a) Fair value changes are not recognized in the accounting records. (b) Financial information is presented so that investors will not be misled. (c) Intangible assets are amortized over periods benefited. (d) Agricultural companies use fair value for purposes of valuing crops. (e) Each enterprise is kept as a unit distinct from its owner or owners. (f) All significant postbalancesheet events are disclosed. (g) Revenue is recorded when the product is delivered. (h) All important aspects of bond indentures are presented in financial statements. (i) Rationale for accrual accounting. (j) The use of consolidated statements is justified. (k) Reporting must be done at defined time intervals