5. state Farm insurance hired James Falls as an agent trainee. after completing an internship phase, he was given an "agent start-up kit." He hired Michelle Quinlan, who had to pass online computer tests to be licensed to work for a state Farm agent. a problem with the internet kept the tests from being marked as completed on her transcript. she told Falls, who contacted Yolanda wilson, another state Farm employee, for help. They could not solve the problem. since Quinlan was not working the next day, she gave Falls her coursework user name and password in case he needed to get into the online transcripts. The next day, wilson told Falls that Quinlan’s transcripts were still not showing up as completed. Falls logged onto Quinlan’s account and completed coursework she had not com- pleted. when state Farm later found out that Falls had completed the coursework, it terminated him. Falls sued state Farm for breach of contract. state Farm alleged that Falls had failed to act in good faith and thus it was justified in ending their agreement. was state Farm so justified?

For each of the following situations, indicate whether you agree or disagree with the financial reporting practice employed and state the basic assumption, component, or accounting principle that is applied (if you agree) or violated (if you disagree).wagner corporation adjusted the valuation of all assets and liabilities to reflect changes in the purchasing power of the dollar. spooner oil company changed its method of accounting for oil and gas exploration costs from successful efforts to full cost. no mention of the change was included in the financial statements. the change had a material effect on spooner's financial statements. cypress manufacturing company purchased machinery having a five-year life. the cost of the machinery is being expensed over the life of the machinery. rudeen corporation purchased equipment for $180,000 at a liquidation sale of a competitor. because the equipment was worth $230,000, rudeen valued the equipment in its subsequent balance sheet at $230,000.davis bicycle company received a large order for the sale of 1,000 bicycles at $100 each. the customer paid davis the entire amount of $100,000 on march 15. however, davis did not record any revenue until april 17, the date the bicycles were delivered to the customer. gigantic corporation purchased two small calculators at a cost of $32.00. the cost of the calculators was expensed even though they had a three-year estimated useful life. esquire company provides financial statements to external users every three years.