Sven Hiemstra,Learn-Rite's financial accountant,is not certain about the amount by which the carrying value of inventory should be reduced due to obsolescence.In the past, the reduction due to obsolescence has been approximately $1,000 per annum.
He is of the opinion that this year the reduction should range between $150 and $1,500.In order to avoid taking more losses in the profit or loss (the company is already running at severe losses),he decides to set the reduction at 150,the lowest level possible.
Mr.Hiemstra is violating the faithful representation qualitative characteristics of