Describe some of the likely consequences that can arise

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Suppose a firm has two different accounting systems. For example, suppose it uses EVA to measure and reward management performance. To calculate EVA, annual spending on re- search and development is recorded as an asset and then depreciated in calculating earnings. In reporting earnings to shareholders, R&D spending in any given year is expensed against earnings.

Describe some of the likely consequences that can arise if the firm tries to maintain two different accounting systems.

Reference no: EM13920884

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