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Explain the decision of management to undertake an asset

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Reference no: EM132699116

Assume Kangaroo Ltd. decides to undertake an upward revaluation of its non-current assets just prior to the end of the financial year. This transaction will result in an increase in the total assets and shareholder's equity of the company. Using your own words, critically evaluate the management's decision to undertake the asset revaluation.

Your answer should address the following requirements:

Question (a) Explain the decision of management to undertake an asset revaluation in relation to the debt hypothesis of Positive Accounting Theory.

Question (b) Explain the decision of management to undertake an asset revaluation in relation to the bonus plan hypothesis of Positive Accounting Theory.

Question (c) Evaluate which of the two hypotheses (debt hypothesis and bonus plan hypothesis) can better explain the decision of management.

Reference no: EM132699116

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