Multi-Earnings Company' had the following different patterns of net income based on different accounting policies and estimates/assumptions. These differing net incomes were the result of using different depreciation methods and assumptions about asset useful life, different methods of estimating bad debt expenses, different revenue recognition methods, different inventory valuation methods, and different methods of accruing liabilities such as vacation pay and warranties. In all cases, at the end of the fifth year the company had the same retained earnings, total assets and liabilities, and cash.

Required:
a. Assuming that the company is publicly traded, which of these net income streams (A, B, C, or D) would likely result in the highest share price in early 2016? The lowest share price? Justify your conclusion.
b. Imagine you were the president of this company and the company was publicly listed/ traded. Which representation of earnings would likely give you the largest aggregate bonus if your compensation was based on net income?
c. If you were the sole owner and chief executive officer of the company, which method of deriving net income would you prefer?
d. Does the selection of accounting policies change the actual achievements of the company? Does it change the future of the company? Does it change what people believe the past, present, or future of the company was, is, or will be? Please discuss these differing perceptions and views of the company€™s financial condition.

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In Smillions Net Income A Net Income B Net Income CS39 Net Income D 2011 2012 2013 S30 S30 $30 $25 S35 $27 2014 S30 S34 S25 2015 S30 $40 5-yr Total S150 $150 $150 $150 S22 $29 $30 $30 S21 $24 S34 $35