Analysis: David Johnston is challenging the corporate entity principle by disclosing his private interests with the company. Under the business entity concept, the owner's finances must be separate from the company's finances. The business must be treated as its own legal entity, with no repercussions on the owner. Recommendation: David Johnston should separate from the company all legal expenses relating to his personal matter. The divorce petition must be filed and paid in your own name and not the company's name. The patent registration should have been identified at the time it was incurred, however, it is a business cost and should have been paid by the company. It is in the best interest of the business to separate all legal invoices between the business and the owner in order to uphold an accurate financial picture for the CRA and its shareholders. Conclusion: It is clear that if these financial practices were to be followed, David Johnston, the CRA, the company and its stakeholders will be satisfied. A company must obey IFRS standards, as it provides a company with accurate financial measures and