Answer
This reporting violates the principle of faithful representation because the administrative expenses should be treated as operational expenses in the period they were incurred; it doesn't matter that they were one-time. Such accounting treatment would mislead the users about Counting Crow's financial statements because they are material. The treatment may end up understating the administrative expenses associated with the entity's operations; this misrepresentation violates the requirements of the conceptual framework.
Work Step by Step
This reporting violates the principle of faithful representation because the administrative expenses should be treated as operational expenses in the period they were incurred; it doesn't matter that they were one-time. Such accounting treatment would mislead the users about Counting Crow's financial statements because they are material. The treatment may end up understating the administrative expenses associated with the entity's operations; this misrepresentation violates the requirements of the conceptual framework.
