During the Past Year, a Company Had Some Land Expropriated

question 79

Multiple Choice

During the past year, a company had some land expropriated by the local government when the city was widening a road.Management included the gain in operating income as an offset to losses incurred on the sale of some other assets, as they decided that both events were related to fixed assets.This decision by management could be interpreted as earnings management for which of the following reasons?

• A)It violates the principles of revenue recognition.
• B)It involves management manipulation regarding the timing of the write-down of an asset.
• C)It is an example of a big bath.
• D)It does not disclose the information on the income statement as per the accounting principles and standards.

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Definitions:

Differential Association

A theory that suggests individuals learn criminal behavior from their interactions and communications with others.

Ethical Behavior

Conduct based on recognized principles of right and wrong, influencing how individuals and organizations act in various situations.

Role-Sets

Concept in sociology referring to the array of roles and behaviors expected of an individual in a particular social position.

The Grapevine

An informal, unofficial, and personal communication network found within or across organizations, which is faster and more versatile than formal channels.