Jurnal Umum
Depreciation of Airplanes and Garbage Trucks: Information Value and Fraud Prevention in Financial Reporting
ABSTRACT: This assignment will provide you with a better understanding of the costs
and benefits of management’s use of judgment in financial reporting. First, you will look
at the differences in depreciation policies among three firms in one industry (airlines).
This provides an opportunity to examine why firms in the same industry might adopt
different depreciation policies for similar assets. Then, you will read about Waste Management,
a case in which managers manipulated depreciation estimates to manage
earnings. Finally, you will be asked to evaluate a hypothetical proposal to require all
firms owning similar assets to depreciate them over the same period.
Analyzing depreciation differences between three airlines and speculating about
the reasons for those differences will give you an appreciation for how firms can reveal
information through their accounting policies. The Waste Management case shows how
firms can abuse the discretion that GAAP allows. Assessing a proposal to require uniform
depreciation estimates will provide an opportunity to analyze the tradeoff between
information value and prevention of earnings management.
Keywords: depreciation; earnings management; accounting regulation.
J1221112011 | Tersedia |
Tidak tersedia versi lain