Company A has had a 2-year period of very depressed earnings. This has led Comp. A to believe that it will be important to meet analysts’ earnings estimates for the next several quarters. An accounting strategy that is most likely to help meet this goal is to: A. Decrease asset salvage values. B. Increase asset salvage values. C. Increase the use of operatins leases D. Change the average cost inventory method. I thought it was B because if you increase asset salvage value your take less of a deprection expense and would increase NI. What am I missing here?
Yes B, unless they change the average cost Inv method to something more aggressive D is that the whole question?? change the avg cost inv method as a statement seems in complete?
This is a schweser question and it has A as the answer. Are their any scenarios where decreasing asset salvage value can increase earnings.
yeah, not sure. I would think B as well. What does the Schweser explanation say?
Yeah, it sounds like B to me. What is Schweser’s explanation?
It was on a practice test and I think it must be wrong. Didnt have an explanation.