Warwick Merchants Fleet: An Integrative Case

• In Event: Teaching, Learning, and Curriculum I

Abstract

The primary subject matter of the case is accounting for certain repetitive maintenance costs occurring at multi-year intervals. The case asks students to consider whether a more meaningful measure of periodic economic performance is obtained by allocating a part of these costs to each accounting year or by allocating all of the cost to the year in which the maintenance takes place. The students are confronted with key issues in accounting theory involving expense and liability recognition, definitions of the elements of financial statements, the matching principle, objectives of financial reporting, and the issue of income smoothing. Further, students are asked to consider the tax, auditing, and ethical implications related to the various choices in accounting principles.

Authors

• Susan L. Swanger, Western Carolina University

• Roger Lirely, University of Texas-Tyler

• N. Leroy Kauffman, Western Carolina University

• Reed A. Roig, University of North Carolina-Asheville