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When a company makes huge unwarranted asset write-offs that…

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When a company makes huge...
When a company makes huge unwarranted asset write-off’s that drastically overstate expenses and outside auditors (CPAs)permit companies to engage in the dubious trick called the “big bath” because the assets being written off are of little value, and the true value of the assets cannot be validated; explain why managers would want their companies to take a big bath. (Provided hint: Consider how a big bath affects return on investment and residual income in the years following the write-off.)
Submitted: 8 years ago.Category: Business and Finance Homework
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6/19/2010
Business Tutor: Steve, MBA replied 8 years ago
Steve
Steve, MBA
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hi, is thre a word minimum on this?

Edited by Stephen, MBA on 6/19/2010 at 4:40 PM EST
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Customer reply replied 8 years ago

No... it is one of a long list of potential discussion questions, but the one I will probably get nailed with because it is the one that I don't know the answer.

Thanks for your input.

Business Tutor: Steve, MBA replied 8 years ago
thanks, XXXXX XXXXX have it for you shortly.
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Business Tutor: Steve, MBA replied 8 years ago

Hi,

 

Here is your answer:

 

http://www.box.net/index.php?rm=box_download_shared_file&file_id=f_453462842&shared_name=x0qg09gc60

 

Let me know if you have questions. Please press ACCEPT if satisfied.

 

Cheers,

 

Steve

 

Steve
Steve, MBA
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Customer reply replied 8 years ago

Perfect----Accepted. Now I hope I'm not burning you here, but there is a part 2 to the same question...even though it may not seem to be connected. The question is below, but the background of the question is from the Business Week article by Sarah Bartlett on October 5, 1998. The question also uses the current examples of Motorola's $1.8 billion restructuring charge and the multibillion-dollar write-off's for "in process" research taken by Compaq and WorldCom.

 

 

Annual reports are financial reports issued to the public and the reports are the responsibility of auditors who are CPA's operating under the ethical standards of the American Institute of Certified Public Accountants (AICPA). As a result, attempt to manipulate annual report data are not restricted by the Institute of Management Accountants Standards of Ethical Conduct. Do you agree or disagree?

 

Business Tutor: Steve, MBA replied 8 years ago

I did not get an accept confirmation? Can you please confirm?

 

I disagree. The code of conduct does restrict the manipulation of annual report data, but it is still possible to manipulate within the rules. So, from that standpoint, the code does not 100% restrict manipulation.

 

 



Edited by Stephen, MBA on 6/19/2010 at 5:20 PM EST
Steve
Steve, MBA
Category: Business and Finance Homework
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Business Tutor: Steve, MBA replied 8 years ago

Thanks for accepting.

 

Please feel free to request me directly in the future at this link:

 

http://www.justanswer.com/profile.aspx?PF=26942375&FID=212

 

and please put "FOR STEPHEN ONLY" at the beginning the post.

 

Have a good rest of the weekend.

 

Steve

 

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