1. What GAAP does each situation violate?
GAAP Situations
What GAAP does each situation violate?

2. Situation 1
David was able to find an awesome deal on new piece of machinery for the plant! The company who built the machinery has gone out of business and sold David a piece of Machinery valued at $11,000 for a mere $2000. In the company books David records the value of the machinery at $11,000.

3. Situation 2
Erin (the CFO) has decided that a major patent lawsuit against her corporation will not be included in the company’s annual report, because it will not reflect well on the company.

4. Situation 3
Sunil, a small business owner has decided to list two home computer that are used by his children as assets for his business.

5. Situation 4
In an attempt to make her sales figures look better, Angela adds revenue that will not technically be earned until next the next fiscal quarter to her current fiscal quarter sales figures.

6. Situation 5
Xin is a crucial member of the organization and the company would not exist without her. The CFO has decided to list her as an asset on the companies balance sheet.