Chapter 1
Recognition and Measurement
6
AS-16 (
3
)
Marco just opened a Search Engine Optimization business (not incorporated). He continues to
use his chequing account to deposit business revenue and uses his personal visa for various
business expenses. Explain what underlying assumption he is violating.
AS-17 (
3
)
Maltirosa Ltd. is expecting to declare bankruptcy within the next four months and has been
experiencing major difficulties in the past year. The recently released financial statements
do not disclose the impending bankruptcy. Which underlying assumption is violated in this
scenario?
AS-18 (
3
)
The various revenue streams of Axinom Ltd., a Canadian corporation that conducts business
in Europe, Japan and the United States, have been reported in the functional currencies of the
countries in which the revenue was earned. Which underlying assumption is violated in the
situation above?
