Business, 19.12.2019 04:31 cougs

Now heather was working on the current annual report, and the earnings had declined. preliminary calculations showed earnings per share somewhere around $9. earnings had declined because of defaulted contracts from the two large dealers who had gone bankrupt. keel had completely financed the contracts for these dealers because of their previous excellent credit history. now keel was on the hook for a whole fleet of custom recreational vehicles without buyers.

considering the issue of the drop in the earnings, yvonne asked heather to find a way to report stable earnings. she was concerned that cathy might respond negatively to the decline in earnings and complicate the relationship. heather considered various options:

increase the estimated percentage of completion on all custom recreational vehicles in work-in-process inventory by 15 percent. this would erase most of the loss. she could justify this because she always felt that work-in-process estimates had been conservative.

recognize revenue on the fleet of custom recreational vehicles in default. it would be difficult to sell them quickly at a good price, but she could argue that they could be sold. it would be best to find new buyers for them, but that could take well over a year.

switch to mark-to-market accounting for some of the recreational vehicles in progress so the company could recognize all of the profit when contracts with other clients are signed.

1.are any of the options that heather is considering acceptable under generally accepted accounting principles? why or why not?

2.do any of the options being considered by heather constitute financial statements fraud?

3. how would you handle the entire situation if you were in heather’s position?

Answers: 1

Show answers

Another question on Business

Business, 22.06.2019 13:20

Suppose your rich uncle gave you $50,000, which you plan to use for graduate school. you will make the investment now, you expect to earn an annual return of 6%, and you will make 4 equal annual withdrawals, beginning 1 year from today. under these conditions, how large would each withdrawal be so there would be no funds remaining in the account after the 4th withdraw?

Answers: 3

Answer

Business, 22.06.2019 19:50

Aproperty title search firm is contemplating using online software to increase its search productivity. currently an average of 40 minutes is needed to do a title search. the researcher cost is $2 per minute. clients are charged a fee of $400. company a's software would reduce the average search time by 10 minutes, at a cost of $3.50 per search. company b's software would reduce the average search time by 12 minutes at a cost of $3.60 per search. which option would have the higher productivity in terms of revenue per dollar of input?

Answers: 1

Answer

Business, 22.06.2019 21:50

Labor unions have used which of the following to win passage of favorable laws such as shorter work weeks and the minimum wage? a. strikes b. collective bargaining c. lobbying d. lockouts

Answers: 1

Answer

Business, 23.06.2019 03:00

In each of the cases below, assume division x has a product that can be sold either to outside customers or to division y of the same company for use in its production process. the managers of the divisions are evaluated based on their divisional profits. case a b division x: capacity in units 200,000 200,000 number of units being sold to outside customers 200,000 160,000 selling price per unit to outside customers $ 90 $ 75 variable costs per unit $ 70 $ 60 fixed costs per unit (based on capacity) $ 13 $ 8 division y: number of units needed for production 40,000 40,000 purchase price per unit now being paid to an outside supplier $ 86 $ 74 required: 1. refer to the data in case a above. assume in this case that $3 per unit in variable selling costs can be avoided on intracompany sales. a. what is the lowest acceptable transfer price from the perspective of the selling division? b. what is the highest acceptable transfer price from the perspective of the buying division? c. what is the range of acceptable transfer prices (if any) between the two divisions? if the managers are free to negotiate and make decisions on their own, will a transfer probably take place?

Answers: 3

Answer

You know the right answer?

Now heather was working on the current annual report, and the earnings had declined. preliminary cal...

Questions