According to generally accepted accounting principles, Tommy's T-shirts can account for the accident, that is, record an extraordinary item. Using the definition from our Intermediate Accounting Handbook, extraordinary events are defined as “…events and transactions that are distinguished by their unusual nature and by the rarity of their occurrence” (Keiso). Due to the nature of the plane crash and the fact that this type of accident occurs very rarely, it can certainly be described as extraordinary. Tommy must estimate how much to spend on the loss of the building and other losses associated with the accident. He must then record this item on his annual income statement. If Tommy's business isn't going to be operating elsewhere soon, the smart thing to do would be to end the lease so they no longer have to pay for the equipment. Tommy, however, has a location where he can work shortly. He should therefore consider not recording equipment rental expenses during his downtime and spreading them evenly over the rest of the year. It would not make sense to maintain the same rental fees while the equipment is not generating revenue; this would violate the correspondence principle. The best way to accomplish this is to allocate the depreciation of the equipment to future periods when the equipment will be operational. For example, if we had a $1,000 expense each month for equipment depreciation, for the 3 months and 2 weeks the machines will be down, we would readjust the $3,500 to the remaining term of our lease. If there were 10 months of lease after this period, we could add $350 to each of the remaining months. The situation Tommy finds himself in is unfortunate, but yet the effects could have been reduced if he had taken some precautions, in case something unexpected happened. The first precaution Tommy could have taken was to produce T-shirts year-round, not just ramp up production before spring break. If he had a lot of extra shirts in stock for spring break, the week that he is unable to produce t-shirts because of the crash would not affect his business as much economically because it There will still be plenty of shirts to sell. While waiting for the