Question 2 (16 marks)

Ouestion 2 (16 marksp David Chan is the owner of Universal Trading Company. He is currently looking for new investors for expanding the business. He is discussing with his accounting manager on the ways to improve the operation of the business and make the company more attractive for the potential investors. The end of fiscal year of the company is on December 31, 2020. Below are his suggestions:e (i) (ii) (iii) (iv) The company is in the process of closing a big deal of contract, worth $1 million, with customer. David believes that customer will place order on the company on early February 2021. David would like to include the sales amount of this orderin the financial statement of the current fiscal year. To reduce the tax burden of this fiscal year, David suggests to increase the depreciation expenses from $ 10,000 per year to $35,000 per year even though there is nothing changed in the fixed assets of the company. To increase the sales revenue, David determines to offer longer credit period for customers in order to encourage them to place more orders.e For the commission to the salesperson that earned during December 2020, David determines to postpone the payment to the salesperson to the end of January 2021 so that the expenses of the company can be reduced. REQUIRED: Explain whether the above suggestions can be adopted in preparing the financial statements under HK GAAP.