(Identifying accounting assumptions, qualitative characteristics, and measurement conventions, LO 2, 3, 4) For each of the following situations, identify the accounting assumptions, qualitative characteristics, and/or measurement conventions that Exmoor Corp. (Exmoor) would be violating by the accounting choices that it made. Explain your answer.

a. The president of Exmoor decided to increase the value of land the company was holding for resale because the amount originally recorded significantly understated the value.

b. Exmoor’s sole shareholder used Exmoor personnel, material, and equipment to build his mansion. All costs incurred were reported on Exmoor’s income statement as other expenses.

c. A foreign government has threatened to expropriate some of Exmoor’s production facilities in that country without compensation. The country has a history of expropriating the assets of foreign corporations. Exmoor has not provided any information about this possibility in its financial statements because the company is still having discussions with the government and is hopeful that

“things will work out.”

d. Exmoor recently signed a contract to sell specially designed equipment to a poor Third World country for use in agriculture. Exmoor’s engineering staff just began working on the design and it is hoped that the equipment will be delivered in four years. Exmoor recognized the revenue when the contract was signed with the country.

e. Exmoor expenses the cost of inventory when the inventory is received from the supplier.

f. Exmoor decided to change the method for recognizing revenue on some of its long-term contracts from the completed-contract method to the percentage-ofcompletion method to be consistent with its competitors. Due to certain complexities, Exmoor is not changing the revenue reported in previous years.

g. Exmoor purchased new computer equipment for its head office. The equipment itself cost $250,000. Delivery, installation, and renovations to the office to allow the computer equipment to be installed and operated cost an additional

$175,000, which were expensed when incurred.

h. Some of Exmoor’s inventory was seriously damaged in a fire. The company is currently looking for a buyer and is hoping to receive about 25% of the original cost of the inventory. Exmoor’s controller is not writing down the inventory because “it has not been sold yet.”