The first eleven questions are modified from Nurnberg and Schaefer (2010) pages 326-327. Please spend half an hour to thoughtfully read pages 325-327 of Nurnberg and Schaefer (2010). The focus of the assignment is on related-partytransactions (RPT), on which there were a few multiple-choice questions in chapter 10.

1. How useful is Modern Cardiologys income statement as presented in Exhibit 1 in resolving this income-sharing dispute?

2. What are its limitations?

3. Does it conform to U.S. generally accepted accounting principles (GAAP)? Cite the standards including paragraph numbers to support your answer.

4. What is the appropriate entity for assessing the reasonableness of Modern Cardiologys income distribution and profitability?