60.1K

Verified Solution

Link Copied!

4. Explain which one of the three financial accounting changes are required, if any. a. Assess via changes in the notes, $ on face of financials, or any other action items. b. If changes are needed, discuss timing and $ i.e. in current year or subsequent period. i. EcoHarvest Energy Solutions, a renewable energy company, wants to attract more investors. To achieve this, they decide to make 3x the amount of inventory than required thus increasing asset \$'s. by end of next year's operations, unsold inventory will be 50% unsaleable. Management is willing to take the financial cost hit of $300,000 in frivolous inventory next year for the long term investment benefit. ii. HealthCareRX Pharmaceuticals faces aggressive cost-cutting policies, which have impacted the quality of their drug development. In response, they decide to allocate more resources prioritizing product quality and innovation over short-term profitability. As such, they change from a First in First Out to a Weighted Average inventory reporting method on the last day of their current financial period. Opening retained earnings is $1 million. The overall change associated with prior year is an increase to inventory of $100,000. iii. EcoHarvest Energy Solutions discovers a mistake where they double-counted some of their revenue in the previous period financial report. To rectify this, they issue a revised previous financial statement acknowledging this event. Please provide correct adjustment knowing $100,000 was actually sold

Answer & Explanation Solved by verified expert

See Answer