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How management can legally exercise discretion

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Question 1: Management has the ability to manage earnings through the use of discretionary accruals. Suppose that management wanted to increase earnings for the current period. In the following situations, explain how management can legally exercise discretion over earnings under GAAP.

a. Measurement of bad debt expense.

b. Measurement of depreciation expense

c. Measurement of warranty expense (imagine a company like general motors).

Reference no: EM132601096

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