The Porsha Bank Has Provided Its Auditor with the Following

question 47

Essay

The Porsha Bank has provided its auditor with the following selected financial data for 2010:
In reviewing the loans outstanding, the auditors were troubled by the fact that the collectability of some loans to Brazil was questionable. In fact, Porsha Bank has been making new loans to Brazil so that they can pay the interest on the loans already outstanding. The economic situation of Brazil has forced the auditors to insist that Porsha Bank increases its allowance for its current loans to $9,000 and for its non-current loans to $16,000. Porsha Bank decided to adhere to their auditors' suggestions.
Indicate the effects of adopting the auditor's allowance requirements on Porsha Bank's current ratio and 2010 net income.

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Definitions:

Change Agents

Individuals or entities that act as catalysts for change, driving and managing the process of change within an organization or community.

Traditional OD

Refers to classical Organizational Development, a field focused on improving business performance and individuals’ work experience through planned change strategies.

Organization Development

A specialty area that concentrates on broadening the skills and understanding of individuals to drive more successful change and achieve greater effectiveness in organizational settings.

Preparation

The process of making ready or being made ready for use or consideration, often involving planning or research.