How does us gaap differ in treatment from international gaap

Assignment Help Financial Accounting
Reference no: EM13852627

Some companies wish to report a steady growth in income to investors and achieve this goal through accounting practices known as earnings management. One type of earnings management is through the use of reserves for maintenance (also known as cookie jar reserves).

For example, in good years a company may increase maintenance expense by ten or twenty percent over their actual cost for the year. The company will record this by a debit to maintenance expense and a credit to a liability account created for this purpose, called deferred maintenance. In a bad year, the company will debit the deferred maintenance account and credit maintenance expense.

The rationale is that when times are good and the factory is busy, the company may get behind on maintenance. When a slowdown in production occurs, the company has time to catch up on its maintenance.

The actual practice has been observed to have much more to do with the company's ability to report a steady growth in earnings than with the rationale given above.


Using the information provided in the Context for the assessment, along with other sources of information, write a 3-5-page analysis that addresses the following questions:

Do you think that the practice of earnings management through the use of deferred maintenance is ethical? Defend your answer.

Is the practice of earnings management through the use of deferred maintenance allowed in the United States? How does US GAAP differ in this treatment from International GAAP? Support your answers by the use of at least one reference.

3-5 pages, including references and title page

APA formatting

Times New Roman, 12 point

Verified Expert

Reference no: EM13852627

How much can crane expect to receive for sale of these bonds

Crane Company is about to issue $251,800 of 7-year bonds paying an 8% interest rate, with interest payable semiannually. The discount rate for such securities is 12%. Click he

Depreciation on plant equipment-raw materials handling costs

For each of the following costs experienced by Masterbuilt Motors, pick the most likely cost classification & behavior that would apply. Depreciation on plant equipment, Raw m

Straight line method the double declining balance method

ABC bought company car for 35,000 which will be replaced in 4 years with a salvage value of 10,000. Prepare the depreciation table using the straight line method the double de

Prepare an unadjusted trial balance for palisade creek co

Prepare an unadjusted trial balance. Journalize the adjusting entries. Record the adjusting entries of the journal. Prepare the closing entries. Record the closing entries on

What effect will the cash dividend declaration

Prepare the stockholders' equity section of Dora Corporation's balance sheet on May 31, 2011. Net income earned during the first quarter was $15,000. What effect, if any,

Calculate the value of cash and marketable securities

Mandesa, Inc., has current liabilities of $8 million, current ratio of 2 times, inventory turnover of 12 times, average collection period of 30 days, and credit sales of $64 m

About the earnings per share

The Georgia Peach Company had a net income of $72,600 and preferred dividends of $5,400. Common shares outstanding during the year were 30,000, and this number did not change

What misstatements can appear in the financial statements

If a company does not monitor notes payable for due dates and interest payment dates in relation to financial statement dates, what misstatements can appear in the financia


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd