Scheme affect the companys balance sheet

Assignment Help Cost Accounting

Reference no: EM13298408

In the communication business, companies often use the linesof other communications companies. This line usage is a signifgantoperating expense for Blowhards Company. Generally acceptedaccounting principles require operating costs like line use to beexpensed as they are incurred each year. Each dollar of line costreduces the net income by a dollar. After reviewing thecompany's operations, blowhard concluded that the company didnot currently need all of the line use it was paying for. it wasreally paying the owner of the lines now so that the line use wouldbe available in the future for all the expected new customers.Blowhards instructed his accountant to capitalized all of the linecost charges and depreciate them over 10years. The accountantreluctantly followed instructions and the companies net income forthe current year showed a significant increase over prioryear's net income. Blowhard found away to report continuedgrowth in the company's net income and increase the value

How does Mr. Blowhard scheme affect the amount of income that the company would otherwise report in its financial statement and how does the scheme affect the company's balance sheet?

How many ways can you adjust the financial records to make your company look better yet still follow GAAP and ethical guidelines

Reference no: EM13298408

Questions Cloud

By how much would the monetary base change : If the Fed bought $3.5 billion in government securities and the public withdrew $2.0 billion from their transactions deposits in the form of cash, by how much would the monetary base change?

How to calculate [oh-] in the aqueous solution : Calculate [OH-] in the following aqueous solution at 25 deg C: [H3O+] = 3.6×10^?2 M? I know you have to divide 1x10^-14 by the 3.6x10^-2 and the answer I got was 2.8x10^-17 but it said my answer is wrong

How many years ago was it produced : Tritium with a half-life of 12.3 years is used to verify the age of expensive brandies. how many years ago was it produced

Our government claims to promote competition : Given that our government claims to promote competition, and that we call ourselves a “free market” (a.k.a. a capitalist society), do you think these requirements are contradictory to these claims? Support your answer with arguments and examples.

Scheme affect the companys balance sheet : How does Mr. Blowhard scheme affect the amount of income that the company would otherwise report in its financial statement and how does the scheme affect the company's balance sheet?

What coupon rate should the bonds have in oder : There is a 60% probability that long term interest rates one year from today will be at 13% and a 40% probablity that they will be at 9%. Assume that if interest rates fall the bonds will be called. What coupon rate should the bonds have in oder t..

What faction of dosage will still be in the patient thyriod : A thyroid cancer patioent is given a dosage of 131I, What faction of the dosage will still be in the patient's thyroid

How to calculate the ph of clean rain in the scenario : The pH of clean rain is influenced by the partial pressure of CO2 in the atmosphere. In addition, acid rain can be formed when sulfur dioxide (SO2) is discharged into the atmosphere. i) The atmospheric CO2 concentration could rise to 400 ppmv by 20..

Explain the change in internal energy (in j) of a system : What is the change in internal energy (in J) of a system that absorbs 0.532 kJ of heat from its surroundings and has 0.225 kcal of work done on it? = j

User Account

All Pages