Reference no: EM132824289

Sweet Grapes Corp. is a Canadian manufacturer of grapefruit juice. Sweet Grapes is a public company that is famous for its type of juice. You are appointed as the audit manager. You are provided with the following information by management.

1. The treasurer of Sweet Grapes Corp. would like to prepare financial statements only during downturns in the company's wine production, which occur periodically when the grape crop fails. He states that it is at such times that the statements could be most easily prepared. The company would never allow more than 30 months to pass without statements being prepared.

2. Sweet Grapes Corp. faces a possible government expropriation (that is, takeover) of its foreign facilities and possible losses on amounts that are owed by various customers who are almost bankrupt. The company president has decided that these possibilities should not be noted on the financial statements because Sweet Grapes still hopes that these events will not take place.

3. Maurice Norris, the CEO of Sweet Grapes Corp., bought a computer for his own use. He paid for the computer by writing a cheque on the bookstore chequing account and charged the Office Equipment account.

4. Sweet Grapes Corp. decides that it will be selling its subsidiary, Sour Grapes Inc., in a few years. Sweet Grapes has excluded Sour Grapes' activities from its consolidated financial results.

Required

1. Discuss the objective and qualitative characteristics of financial information.

2. For each of the situations above, list the foundational principle or qualitative characteristic of financial information that has been violated. Explain your answer.