Originally Posted by
mylink
Scenario 2.Joseph case owns 5 antique flee markets and rents out spaces to various antique dealers plus has his own space in each of the buildings. Each month he invoices the dealers for their space but once in awhile he will trade rent for one of items the dealer has for sale but never records a transaction for the trade because the item hasnt been sold yet. when the item sells then he will record the difference between the rent and sale. sometimes the item is for personal use and sometimes he sells the item in one of his other markets in another city. his reasoning is that all items in his house are for sale so he should not show any transaction for the item because it is still for sale. Joseph also owns a moving van which he uses to transport antiques and from time to time will move other dealers antiques and charge cash to cover the fuel but never records a transaction for the cash he has received. On occasion Joseph will rent his truck to trade for items a dealer may have may have for sale but does not record a transaction for the use of the truck or for the item he has received because the items hasnt been sold yet. When the items sells he will record the difference between the rent and the sale. Joseph is also registered appraiser and so are some of the dealers he rents space to. Every now and then an insurance company or customer requires an appraisal so Joseph will use one of the dealers that rents space from him and he returns the favour when its needed. Joseph feels this is a good practise since it keeps a good working relationship between him and the dealers that work with him. Qestions 1 gap principle violated how violated how to fix it. Here is what i came up with he violated the Revenue regonition and full disclosure principal and i am stuck.
