Question 3.

Roberson Company manufactures lithium car batteries for sale to electric car manufacturers. Lizzy Hayes, CPA, the companys controller, is preparing the financial statements for the year ended December 31, 2022.

Ms. Hayes asks you what you think what needs to be done (and WHY) about disclosing the following items that have not been addressed yet.

1) Roberson leases its facilities from the brother of the CEO.

2) On January 15, 2023, Roberson signed a contract to sell a tract of land that its had been holding as an investment. The sale resulted in a material gain. The act of sale was completed on February 5, 2023.

3) Roberson uses the straight-line method for compute depreciation on all its depreciable assets.

4) Roberson extended the lives of its productive assets by 3-5 years, which had a material impact on income. (and what kind of impact was it?)

5) Roberson uses the first-in, first-out method as its inventory cost flow alternative. Other companies in its industry use the last-in, first-out method.

During February 2023, Roberson realized that significantly more batteries of a model sold in 2022 were failing than they had thought.