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Unformatted text preview: equipment. The bookseller justified this decision because it argued that the merger was, in reality, a purchase of inventory. P3: Earnings Management A large consumer products manufacturer placed some excess cash in trading securities that dropped in value by $1.5 million. Because purchasing short-term securities is unusual for the Company, management valued the securities at cost and decided to hold on to the securities until the values increased. The Company had $40 million net income for the fiscal year. An airline suffered an operating loss of $30 million this fiscal year, largely due to increases in fuel prices. The Company had been struggling with the auditors for several years concerning the realizable value of its airplane fleet. The auditors had been concerned that the fleet might be overvalued by $15 to $30 million. The Company informed the auditors that it was willing to write-off $30 million of the value of its airplane fleet....
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This note was uploaded on 10/05/2011 for the course ACG 5637 taught by Professor Monikacaushoulli during the Fall '08 term at University of Florida.
- Fall '08
- Fiscal Year