2. If you could relate materiality, disclosure, and conservatism to types of measure- ments (nominal, ordinal, interval, and ratio scale), how would you? Zoff (3007) docoribon the SEC's positions regarding historical costing in the 20th 2
2. If you could relate materiality, disclosure, and conservatism to types of measure- ments (nominal, ordinal, interval, and ratio scale), how would you? Zoff (3007) docoribon the SEC's positions regarding historical costing in the 20th 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Do #2 in Critical Thinking Analysis
Transcribed Image Text:chided for allowing Halliburton to book a per-
struction company, and
its auditor,
projects were completed, but before both agreed settlements with customers and,
centage of cost overruns that Halliburton attempted to collect from customers after
of course, collection thereof. The practice of trying to collect cost overruns in the
construction industry is not uncommon. Until 1998, cost overrun collections were
not booked until received. Since that time, Halliburton "began guessing how much
of a disputed surcharge would ultimately get paid and crediting itself in advance."
a. Is there a case that can be made for allowing Halliburton to book these over-
runs? What arguments, if any, support Halliburton's accounting methods?
b. What situations should prevent Halliburton from booking these overruns
prior to collection?
Critical Thinking and Analysis
1. How permanent do you think the postulates and principles underlying historical
costing will be?
2. If you could relate materiality, disclosure, and conservatism to types of measure-
ments (nominal, ordinal, interval, and ratio scale), how would you?
3. Zeff (2007) describes the SEC's positions regarding historical costing in the 20th
century, eventually questioning whether the United States has ever "had a private-
sector process for establishing 'generally accepted accounting principles."" To what
extent do you agree/disagree with Zeff's point?
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