(Applying accounting assumptions, qualitative characteristics, and measurement conventions, LO 2, 3, 4) For each of the following items pertaining to Dollarton Ltd.

(Dollarton), indicate which accounting assumptions, qualitative characteristics, and measurement conventions are influencing the accounting treatment used. Explain your reasoning.

a. A corporation that is owned by Dollarton is going out of business and values its assets and liabilities at their net realizable value. Dollarton and the other companies owned by it do not value their assets and liabilities at their net realizable value.

b. Dollarton records the purchase of new heavy equipment at $22,000,000, the price paid. The $20,000 cost of inspecting the equipment is expensed when the equipment was purchased as a maintenance expense.

c. Dollarton holds a portfolio of shares of publicly traded companies. The shares are recorded on the balance sheet at their cost, which is significantly lower than their market value. Dollarton reports the market value of the portfolio in the notes to the financial statements.

d. Dollarton prepares financial statements for its December 31 year end and amounts in the statements are stated in U.S. dollars.

e. Because of zoning problems with a piece of land, Dollarton writes down the cost of the land to $500,000 from its cost of $1,200,000.

f. A person who claims to have been injured using one of Dollarton’s products launches a lawsuit against the company. Dollarton includes a note describing the lawsuit in its financial statements but does not accrue any amount in the financial statements themselves.