Has heggy company violated any of the financial statement

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Heggy Company, a privately owned corporation, is producing cellphone accessories. It relies on ASPE to prepare its financial statements. The company is doing well and is planning to expand its product line. Assume you are a newly hired accountant reviewing Heggy's financial statements. You realize that the company recently purchased machinery for $700,000 as part of its expansion strategy. After a long negotiation, Heggy's purchasing department was able to negotiate the price well below the market value of $740,000. The machinery has been recorded in Heggy's books at $740,000. Also, Heggy Company has paid $15,000 for the cost of the plant's insurance for the upcoming year and expensed the whole amount. Heggy believes that this expensing would be an effective cost-saving strategy in the long run, as it will avoid the extra bookkeeping associated with updating the prepaid insurance account.

Problem 1: Has Heggy Company violated any of the financial statement foundations of ASPE? Explain

Reference no: EM132692072

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