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The owner and accountant of Arctic Lynx Snowmobile Company were preparing Income statements for an important meeting with potential investors. The company badly needed new investment in the company to develop new snowmobile models for next year.

Two income statements were available to illustrate last years performance:

1. The first income statement for the six-month period of October 1 to March 31, showed a very healthy profit of $520,000.
2. However, the second income statement for the period of April 1 to September 30, showed a loss of $100,000.

The owner, eager to please his new investors, argued with his accountant that he should only show the better income statement. He felt it didnt matter which time period they chose to measure the health of the business.

Required:

1. What time period should the business choose to obtain an accurate picture of probability for the company?
2. Why was the period from October to March so profitable?
3. Calculate the true profit for last years operations.
4. Did the companys accountant have an obligation to reveal both income statements to the investors? Explain. What would you have done in this situation?

Please do not copy from Chegg otherwise I have to report the answer. Explain the answer throughly by showing each step of the calculation.

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