For each of the assumptions listed below, fill in the appropriate letter to indicate which of the following accounting assumptions have been violated.
a) Monetary Unit Assumption
b) Cost Principle
1. Harvester International revalues its financial statements each year to take into consideration the effects of inflation. The company justifies its decision by stating the "inflation adjusted statements more fully reflect the purchasing power of the company's earnings."
2. Ernie began operations 11 years ago and purchased land for $200,000. Ernie has since built a manufacturing plant on this land to use in daily operations. Today Ernie has appraised the value of his land to be $1.5 million. He would like the increase in the value of his land to be reported on the financial statements at $1.5 million.

Question

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The Answer of For each of the assumptions listed below, fill in the appropriate letter to indicate which of the following accounting assumptions have been violated.
a) Monetary Unit Assumption
b) Cost Principle
1. Harvester International revalues its financial statements each year to take into consideration the effects of inflation. The company justifies its decision by stating the "inflation adjusted statements more fully reflect the purchasing power of the company's earnings."
2. Ernie began operations 11 years ago and purchased land for $200,000. Ernie has since built a manufacturing plant on this land to use in daily operations. Today Ernie has appraised the value of his land to be $1.5 million. He would like the increase in the value of his land to be reported on the financial statements at $1.5 million.

For Each of the Assumptions Listed Below, Fill in the Appropriate