L19 Notes_Part_20 - Chapter 15 P3 Earnings Management Each...

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7 Ways to reduce earnings quality Also known as “financial shenanigans” Record revenue too soon or of questionable quality Recording bogus revenue Boosting income with one time gains Shifting current expenses to a later or earlier period Failing to record or improperly reducing liabilities Overly conservative to be aggressive later: Shifting current revenue to a later period Shifting future expenses to the current period as a special charge.
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Unformatted text preview: Chapter 15 - P3 Earnings Management Each of the following techniques for managing earnings was described in the chapter: “Big Bath” charges Write off of acquired assets “Cookie Jar” reserves Abuse of materiality Questionable revenue recognition For each of the following examples of earnings management, state which technique is being used and suggest a method of resolving the issue with management:...
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