Unformatted text preview: . The fraud damages can be calculated in two ways: Out-of-pocket loss rule: $1.8 million - $1.6 million = $200,000. Benefit-of-the-bargain rule: $2 million - $1.6 million = $400,000.
Chapter 10 Forensic and Investigative Accounting 7 Lost Profits Methods
Before-and-after method--Take sales or sales growth before the act and compare to the comparable figures afterward. Yardstick (or benchmark) method-- Compare sales or sales growth of the company to other companies or to other industry averages. (continued on next slide) Chapter 10 Forensic and Investigative Accounting 8 Lost Profits Methods
"But-for" method--The difference in the estimated profits (but-for the actions of the defendant) and the actual profits. Dire...
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