Reference no: EM133085743

Question - State whether you agree or disagree with the financial reporting practice. Briefly explain your answer.

An entity provided the following situations:

1. The entity's accountant increased the carrying amount of a patent from the original cost of P1,000,000 to the recently appraised value of P3,000,000.

2. The entity paid for the personal travel of the chief executive officer and charged travel expense.

3. At the end of the current reporting period, the entity received an order from a customer. The merchandise will be shipped in early next year. Because the sale was made to a long-time customer and the invoice was paid in the current year, the controller recorded the sale in the current year.

4. In the middle of the current year, the entity paid a certain amount to an insurance company for one-year comprehensive insurance coverage. The entity recorded the entire expenditure as an expense in the current year.

5. The entity included a note in the financial statements that described a pending lawsuit against the entity.