Scheme affect the companys balance sheet
Course:- Cost Accounting
Reference No.:- EM13298408

Assignment Help
Assignment Help >> Cost Accounting

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

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Cost Accounting) Materials
Explain why the cost differs for each product. Explain whether or not it is possible to drop the price of the Alpha to compete. Based on your analysis, explain whether LEHIGH
How would you use this five-step process in day-to-day cost accounting and management accounting practices to better develop a set of standards and guidance for use in a bus
The journal entry to record the incurrence of direct labor costs in November would include the following for Work in Process - total cost of producing and selling the product
Prepare a bank reconciliation in good form - record the necessary journal entries on the company's books resulting from the bank reconciliation prepared in part (1) above.
What amount of the current cost per unit is attributable to non-value-added activities? Calculate the new target cost per unit for a sales price of $800 if the profit per unit
Prepare a purchases budget for the first quarter of 2011 in units, in total, and in dollars and determine the budgeted payments for purchases of raw materials for each of the
Payday loans are very short-term loans that charge very high interest rates. You can borrow $250 today and repay $300 in two weeks. What is the compoundedĀ annualĀ rate implied
Prepare abbreviated income statements for the years 2011 and 2012 on the cash basis -Prepare abbreviated income statements for the years 2011 and 2012 on the accrual basis.