Examlex

Solved

Briefly Explain How a Company That Recognized Revenue Over Time

question 21

Essay

Briefly explain how a company that recognized revenue over time by estimating percentage of completion using a cost-to-cost ratio could manage earnings upward to meet a profit projection. What sort of ethical problems could result from that earnings management?


Definitions:

Income Tax Rate

The proportion of an entity's income that is subjected to taxation.

Deferred Tax Note

An explanatory note in financial statements detailing the amounts and causes of deferred tax assets and liabilities.

Earnings Quality

An assessment of the degree to which reported income provides accurate information about a firm's true income generation and sustainability.

Effective Income Tax Rate

The average percentage of their pre-tax income that individuals or corporations pay in taxes.

Related Questions