Reference no: EM131493272

Assignment

Case 1: After the Julie Company issued its previous years' financial statements, it noticed that it incorrectly calculated depreciation expense and, thus, disclosed this fact as a prior period adjustment in its current years' financial statements. (This difference also did not affect any cash balances, since Julie maintained an operating loss for both periods.) However, Julie did not issue comparative financial statements in the current year. Julie now wonders how to disclose this prior period adjustment in its current year's Statement of Cash Flows.

Case 2: On January 1, the Hawaii Cancer Institute has received a promise from the Obama Foundation to receive a building that the Foundation recently appraised at $200,000-but cost it only $125,000. The Institute promised to keep the building "permanently restricted," i.e., never to sell it and to use it only for its work in helping cancer patients.

After not receiving title by December 30, the Institute inquired as to the status of the promised building. The Foundation stated that water damage to the building (from last year's flood) has permanently reduced the carrying value of the building to $100,000. The Foundation had initially hoped to set up a fund drive to help "clean up" the building. However, both parties have agreed that as of December 31, this fund drive would not materialize and the date to receive the building would remain unknown. How should the Institute now record the promised gift?

Case 3: In auditing Crispy Inc., the auditor has determined that certain information that is not required by an applicable financial reporting framework has been included in the company's basic financial statements which is clearly differentiated and identified. The auditor seeks your assistance to determine is such information need be audited and included in the audit report?