Mike crane is an audit senior of a large public accounting

Reference no: EM13590538

Mike Crane is an audit senior of a large public accounting firm who has just been assigned to the Frost Corporation's annual audit engagement. Frost has been a client of Crane's firm for many years. Frost is a fast-growing business in the commercial construction industry. In reviewing the fixed asset ledger, Crane discovered a series of unusual accounting changes, in which the useful lives of assets, depreciated using the straight-line method, were substantially lowered near the midpoint of the original estimate. For example, the useful life of one dump truck was changed from 10 to 6 years during its fifth year of service. Upon further investigation, Mike was told by Kevin James, Frost's accounting man-ager, "I don't really see your problem. After all, it's perfectly legal to change an accounting estimate. Besides, our CEO likes to see big earnings!"

Instructions

Answer the following questions.

What are the ethical issues concerning Frost's practice of changing the useful lives of fixed assets?
Who could be harmed by Frost's unusual accounting changes?
What should Crane do in this situation?

Reference no: EM13590538

Questions Cloud

Describe the financial statement presentation of noncash : discussion board topic gaap requires the statement of cash flows be presented when financial statements are

Historical cost 25000 replacement cost 20000 net : the following information pertains to inventory held by a company at december 31 2011.historical cost 25000

A single conducting loop of wire has an area of 68 10-4 m2 : question a single conducting loop of wire has an area of 6.8 10-4 m2 and a resistance of 110 o. perpendicular to the

Assume that the conditions are met for the transfer of : beyonceacute corporation factors 175000 of accounts receivable with kathleen battle financing inc. on a with recourse

Mike crane is an audit senior of a large public accounting : mike crane is an audit senior of a large public accounting firm who has just been assigned to the frost corporations

Abc inc entered into a four-year lease of equipment for : abc inc. entered into a four-year lease of equipment for 9000 a year payable at the beginning of each year. the lessor

A solenoid with a cross-sectional area of 185 10-3 m2 is : question a solenoid with a cross-sectional area of 1.85 10-3 m2 is 0.773 m long and has 440 turns per meter. find the

Sylvan inc entered into a noncancelable lease arrangement : sylvan inc. entered into a noncancelable lease arrangement with breton leasing corporation for a certain machine.

West palm company engaged in the following transactions : west palm company engaged in the following transactions involving promissory notes. may 3 sold engines to mittal

User Account

All Pages