Question

Instructions Identify each of the questions as being more likely asked by an internal user (I) or an external user (E). E1-3 Sam Cresco, president of Cresco Company, has instructed Sharon Gross, the head Discuss ethics an of the accounting department for Cresco Company, to report the company's land in the historical cost pri company's accounting reports at its fair value of $170,000 instead of its cost of $100,000. (LO 3) Cresco says, "Showing the land at $170,000 will make our company look like a better investment when we try to attract new investors next month." Instructions Explain the ethical situation involved for Sharon Gross, identifying the stakeholders and I the alternatives.

Answer 1

Answer- According to historical cost principle all fixed assets must be reported in balance sheet on its cost only no matter whatever the market value is so it must be record at its book value i.e. $100,000. It would be wrong and violation of GAAP (Generally Accepted Accounting Principle) to record land at its fair value which is $170,000.

Is Sharon would agree to the idea of Sam Cresco, president this would be a fraud.

However in notes to account rise in market value can show.

Kindly give me thumbs up if u like my answer...Thanks!!!