The Anderson Manufacturing Company, a California corporation listed on the Pacific Coast Stock Exchange, budgeted activities for 2007 as follows:

Anderson has operated profitably for many years and has experienced a seasonal pattern of sales volume and production similar to the following forecasted for 2007. Sales volume is expected to follow a quarterly pattern of 10%, 20%, 35%, and 35%, respectively, because of the seasonality of the industry. Also, due to production and storage capacity limitations, it is expected that production will follow a pattern of 20%, 25%, 30%, and 25%, respectively. At the conclusion of the first quarter of 2007, the controller of Anderson has prepared and issued the following interim report for public release:

The following additional information is available for the first quarter just completed, but was not included in the public information released:
1. The company uses a standard cost system in which standards are set at currently attainable levels on an annual basis. At the end of the first quarter, there was underapplied fixed factory overhead (volume variance) of $50,000 that was treated as an asset at the end of the quarter. Production during the quarter was 200,000 units, of which 100,000 were sold.
2. The selling, general, and administrative expenses were budgeted on a basis of $900,000 fixed expenses for the year plus $0.50 variable expenses per unit of sales.
3. Assume that the warehouse fire loss met the conditions of an extraordinary loss. The warehouse had an undepreciated cost of $320,000; $145,000 was recovered from insurance on the warehouse. No other gains or losses are anticipated this year from similar events or transactions, nor has Anderson had any similar losses in preceding years; thus, the full loss will be deductible as an ordinary loss for income tax purposes.
4. The effective income tax rate, for federal and state taxes combined, is expected to average 35% of earnings before income taxes during 2007. There are no permanent differences between pretax financial income and taxable income.
5. Earnings per share were computed on the basis of 100,000 shares of capital stock outstanding. Anderson has only one class of stock issued, no long-term debt outstanding, and no stock option plan.

Required
1. Without reference to the specific situation described previously, what are the standards of disclosure for interim financial data (published interim financial reports) for publicly traded companies? Explain.
2. Identify the weaknesses in form and content of Anderson€™s interim report without reference to the additional information.
3. For each of the five items of additional information, indicate the preferable treatment for each item for interim reporting purposes and explain why that treatment ispreferable.

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Amount Units ,000,000 1,000,000 Net sales Cost of goods sold Gross margin Selling, general, and administrative expenses Operating earnings Nonoperating revenues and expenses Earnings before income taxes Estimated income taxes (current and deferred) Net eamings Earmings per share $6,000,000 (3,600,000) $2,400,000 1,400,000 $1,000,000 0 $1,000,000 (350,000 650.000 $6.50 Amount Units 100,000 100,000 Net sales Cost of goods sold Gross margin Selling, general, and administrative expenses Operating loss Loss from warehouse fire Loss before income taxes Estimated income taxes Net loss Loss per share of common stock 600,000 (360,000 240,000 275,000 (35,000) (175,000) (210,000) (210,000) $(2.10)