Finance accounting assignment on earning management

Finance accounting on earning management - Assignment Example The second part of the paper would answer questions relating to impairment of assets. It will involve a critique of the circumstances under which impairment is declared. It will also explain when companies must perform impairment reviews and examine a practical case of impairment my Peugeot-Citroen and Vodafone. A. Managers' Incentive for Earning Management. â€Å"Earning management occurs when managers use judgement in financial reporting and in structuring transactions to alter financial reports to either mislead some stakeholders about the underlying economic performance of the company or to influence contractual outcomes that depend on reporting accounting numbers† (Rowen and Yaari, 2009: 26). This implies that earning management is centred around the fact that a firm's directors and managers might want to present information in a way and manner that is not true nor accurate. Earning management is sometimes called disclosure management and creative accounting. It includes the use of approaches and systems to disclose accounting information in a way and manner that meets a defined end or objective (Alistair, 2008). Managers often have targets that are predetermined for them by the board of directors. This implies that they would have to work hard and do whatever is legally acceptable and possible to meet those objectives and standards. In the process of attaining the given standards and objectives of financial statements, most managers end up putting together financial statements in a creative manner. In other words, they do everything possible and practicable to balance the accounts so that it reflects the ends or the final figure that is expected of the management of an organization. In most situations, earning management is done to smoothen profits and ensure that the earning of the company in a given period is forged in a way and manner that it is in line with targets. This presents a different reality of the earnings of the period and this defeats the purpose of financial statements and financial reporting of capturing the economic realities in an objective and complete manner. These managers therefore manage their earning and disclosures in a way that favours them and enables them to appear to be meeting the end that they have in mind. In a research conducted by Cheng and Warfield (2005) they identified that the main objective for earning management amongst manager includes three interlinked ideas and concepts. They include: 1. Earning management incentives 2. Future manager trading. 3. Enhancement of organisational position. The first idea is that earning management incentive allows managers to attain the favour of people who set targets for them. This is because in most cases, managers are judged and assessed on the basis of the attainment of results and targets. In reality, manager's worth is identified by how well he meets the financial and economic targets that are set by the people at the top of corporate governance. There is therefore the desire or expectation to use creative techniques to ensure that they attain financial targets. This leads to pressure to use various loopholes and techniques in accounting concepts to present a favourable position. The second idea is that managers often get incentives that are tied to their performance.

Material Values in A Raisan in the Sun Essay Example | Topics and Well Written Essays - 750 words

Material Values in A Raisan in the Sun - Essay Example Walter Younger, the son of the family, was portrayed as the one who is always after money, so he can invest in business and emerge successful. â€Å"No—it was always money, Mama. We just didn't know about it.† (Hansberry 34). Although, he has noble target of achieving success, his path to achieve that by mainly going for money even while hurting others, makes him a kind of antagonist of the story. However, Walter towards the end of the play realizes his mistake and transforms into a supportive figure and even the protagonist. He emerges as the central character, and fully supports his family as they wish to own a large house in a developed area. When the Youngers buy an independent house in a predominant white locality of Clybourne Park, they were dissuaded by the White people residing there. One of the men from that group, Mr. Lindner, on behalf of the other white people, even goes to the extend of bribing the Youngers to prevent them from moving into the Clybourne Par k. The whole Younger family is struggling financially, but still they refuse to accept the money. Although Walter loses majority of the insurance money because of the cheating by one of his friends, he stands up for his family’s wishes and refuses to accepts the money. Walter believes that buying and living in that particular house as wished by his father will provide him more honor than acquiring material values. If the Youngers’ family had received money from Mr. Lindner, the dreams of each family member would have actualized but that would at the cost of values. Mama, the matriarch of the family, firmly refuses the money. â€Å"†¦nobody in my family never let nobody pay'em no money that was a way of telling us we wasn't fit to walk the earth...We ain't never been that - dead inside† (Hansberry 34). The refusal of the Youngers’ to accept money even when they needed it and thus holding on to their house, exhibits how they hold self-worth and honor m ore dearer than material wealth. Walter loses the insurance money, after his friend Willy Harris escapes somewhere with the money provided by Walter for their business initiative to set up a liquor store. Although he failed personally, he learns quick lessons and understands that achievement of his family’s dream particularly of his dead father could give more satisfaction than the achievement of his personal dream. Walter believes that the new house was indirectly earned by his father through his insurance money for them, â€Å"We have decided to move into our house because my father—my father—he earned it for us brick by brick.† (Hansberry 37). Thus, he puts optimum efforts, even avoiding the temptation of easy money, to buy and stay in the house of their choice. Youngers’ family is aware of the fact that if they reside in Clybourne Park, they could face numerous race related problems from the white people, who reside there. For their part, they gave the commitment that they would have good relationship with the neighbors, without taking any racial stance. â€Å"We don't want to make no trouble for nobody or fight no causes, and we will try to be good neighbors. And that's all we got to say about that. We don't want your money.† (Hansberry 37). However they continue with their decision to