Get a unique, high-quality and non-plagiarized paper from us today at the most affordable price
Email us : premieredtutorials@gmail.com

ABC Corporation income statement at year-end of 2014

David, supervisor for the ABC Corporation, is preparing the companys income statement at year-end of 2014. He notes that the company had decided and replaced one of its equipment and lost $60000 on the sale of that equipment which was costs 150000 and its depreciation is $50000. Since the company has sold equipment routinely in the past with amount of $40000, David knows the losses cannot be reported as unusual. He also does not want to highlight it as a material loss since he feels that will reflect poorly on him and the company. He reasons that if the company had recorded more depreciation during the useful life of the assets (increasing the depreciation with 80%), the losses would not be so great. Since depreciation is included among the companys operating expenses, he wants to report the losses along with the companys expenses, where he hopes it will not be noticed.

Required:

1. Is there an earnings management problem in the above case study? If so specify which type of earnings management and Explain the problem in details.

2. If the supervisor record more depreciation during the useful life of the assets in 2014, what is the value of the increase in depreciation, would this be counted as a violation to the generally accepted accounting principles? Identify and discuss the accounting principle that would be violated, if any.

3. Assume that the operating net income for the year 2014 is $300000, what is the effect of the loss on the operating net income before and after increasing depreciation.

4. What is the effect of the proposed accounting treatment on balance sheet of 2014? Specify exactly where the effect will be.

5. How David proposal will affect the net cash flow from operating activities? Explain and determine the value of the change.

6. What should David do? Discuss in any of financial statement should be reported the losses arising from the sale equipment, specify the section of financial statement.

7. Discuss the negative consequences that might be caused by the earnings management practices.

Do you want your assignment written by the best essay experts? Then look no further. Our teams of experienced writers are on standby to deliver to you a quality written paper as per your specified instructions. Order now, and enjoy an amazing discount!!

How to Place an Order 

Send the assignment details such as the instructions, due date/deadline, number of pages and college level to the customer support agent online on live chat,  fill in the assignment details at place an order or send the information to our email address premieredtutorials@gmail.com and a customer support agent will respond to you immediately. 

Once you place your order, we choose for you the best and competent writer for your assignment based on each writer’s competence in handling a subject. 

When the homework is completed, we have a quality assurance team that proofreads the assignment to ensure it meets the required rubric instructions from your professor.

After thorough review of your assignment, we send the paper to the client. In case you need any changes at this point, you can let us know so that we can handle it for you at no extra charge. 

Homework Help Website

Why we should write your Paper 

  1. Money Return guarantee
  2. 0% Plagiarism Rate
  3. Guaranteed Privacy
  4. Written from scratch by highly qualified writers 
  5. Communication at Any Time (24/7)
  6. Flexible Pricing and Great Discount Programs
  7. Timely Deliveries
  8. Free Amendments
Looking for a similar assignment and in urgent need for help? Place your order and have excellent work written by our team of professionals to ensure you acquire the best grades.

  We are here to assist you.

 

Statistics about Us

130 New Projects
235 Projects in Progress
315 Inquiries
420 Repeat clients

© 2021 Premiered Tutorials
All rights reserved. We provide online custom written papers, such as term papers, research papers, thesis papers, essays, dissertations and other custom writing services.

All papers inclusive of research material are strictly intended to be used for research and study purposes only. Premiered Tutorials does not support or condone plagiarism in any form. These custom papers should be used with proper reference.

Place an Order
error: Content is protected !!