Response to the following :
The following accounting issues have arisen at T-Shirts Plus, Inc.:
1. T-Shirts Plus earned a significant profit in the year ended November 30, 20X6, because land that it held was purchased by the State of North Carolina for a new highway. The company proposes to treat the sale of land as operating revenue. Why do you think the company is proposing this plan? Is this disclosure appropriate?
2. Corporations sometimes purchase their own stock. When asked why they do so, T-Shirts Plus management responds that the stock is undervalued. What advantage would T-Shirts Plus gain by buying and selling its own undervalued stock?
3. The treasurer of T-Shirts Plus wants to report a large loss as an extraordinary item because the company produced too much product and cannot sell it. Why do you think the treasurer wants to report the loss as extraordinary? Would that be acceptable?