ACCT251CA2-11Sol - Could this cost anyone his or her job...

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CA 2-11 (a) The stakeholders are investors, creditors, etc.; i.e., users of financial statements, current and future. (b) Honesty and integrity of financial reporting, job protection, profit. (c) Applying the expense recognition principle and recording expense during the plant’s life, or not applying it. That is, record the mothball costs in the future. (d) The major question may be whether or not the expense of mothballing can be estimated properly so that the integrity of financial reporting is maintained. Applying the expense recognition principle will result in lower profits and possibly higher rates for consumers.
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Unformatted text preview: Could this cost anyone his or her job? Will investors and creditors have more useful information? On the other hand, failure to apply the matching principle means higher profits, lower rates, and greater potential job security. (e) Students’ recommendations will vary. Note: Other stakeholders possibly affected are present and future consumers of electric power. Delay in allocating the expense will benefit today’s consumers of electric power at the expense of future consumers....
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This note was uploaded on 11/04/2009 for the course ACCTG 411 taught by Professor Gillick during the Spring '09 term at University of Washington.

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