Question
You are the independent accountant assigned to the audit of Brandi Company. The companys accountant, a fellow graduate of the accounting program you attended has
You are the independent accountant assigned to the audit of Brandi Company. The companys accountant, a fellow graduate of the accounting program you attended has prepared financial statements, which contained the following items:
a)The balance sheet reports land at $100,000. Included in this amount is a piece of property purchased for a future warehouse site at a cost of $30,000 and a speculative land investment at a cost of $50,000.
b)Current liabilities include $50,000 for long term debt that comes due in three months. The company has received a suitable firm commitment to refinance the debt for five years and intends to do so.
c)Investments in marketable securities include $20,000 in short-term high-grade commercial paper which the company states is cash.
Discuss the appropriate classification of the above items and how they should be disclosed in a financial statement.
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