Reference no: EM132653934

Problem - Identifying accounting principles

For each of the following, identify which GAAP was violated by Delco Consulting. In cases where more than one GAAP applies, name the primary GAAP that was not followed.

a. Delco performed work for a client located in China and collected 8,450,000 RMB (renminbi, the Chinese currency), the equivalent of about $1,320,000 Canadian. Delco recorded it as 8,450,000.

b. Delco collected $180,000 from a customer on December 20, 2017, for work to be done in February 2018. The $180,000 was recorded as revenue during 2017. Delco's year- end is December 31.

c. Delco's December 31, 2017, balance sheet showed total assets of $840,000 and liabilities of $1,120,000. The income statements for the past six years have shown a trend of increasing losses.

d. Included in Delco's assets was land and a building purchased for $310,000 and reported on the balance sheet at $470,000.

e. Delco's owner, Tom Del, consistently buys personal supplies and charges them to the company.