Review of Financial Statements

The president of your company paid you a visit today. He believes that the financial statements misrepresent the financial condition of the company and that you as the accountant, have to rectify these mistakes. As an example, he pointed out that the land and building have a carrying value on the books of $350,000 but were recently appraised for insurance purposes at $900,000. In addition, he knows for a fact that company has generated large amounts of goodwill over the years as the result of its dependable service to customers. Yet there is no goodwill listed in the asset section of the balance sheet. He has asked you to estimate the amount of goodwill and record it on the books. He also wants you to increase the value of all plant assets to their appraised values. He stresses the importance of these changes to the company’s ability to obtain a much needed bank loan next week.