MINID Property Corp. (MINID) is a publicly held real estate company in Canada, specializing in retail real estate property. The company took advantage of the economic downturn and purchased several investment properties in the United States over the fiscal year of 2013. The following were the details of the purchase transactions (all in CDN dollars).
The first property is a strip mall located in Silicon Valley, California. The property was appraised at $3 million, with $2 million attributed to land and $1 million to building. The company was informed of high competition for the property and thus decided to pay a premium to win the real estate bid. The purchase price was thus $3.5 million. Management booked 2/3 of the purchase price to land and 1/3 to building. At the end of the year, the company booked an impairment of $500,000 to its land account.
The second property that the company purchased was a small power centre located in Napa Valley, California. The property was appraised at $5.5 million, but management bargained with the owners for a purchase price of $5 million. Management believed the $0.5 million qualified as negative goodwill and that they were supposed to book this amount as profit. However, management did not want the amount to show up on the income statement; therefore, they recorded $5.5 million as the acquisition cost of the property and $0.5 million as a contra-asset account—“negative goodwill”—directly below goodwill in the intangible asset section of the balance sheet.
The third property the company purchased was a small retail store located in downtown San Francisco. Jon Shen, MINID’s CEO, was the original owner of the store and he had paid $300,000 for the property 10 years ago. The property was appraised at $600,000 in 2013. The board of directors decided to buy this property from Jon Shen at a price of $750,000. The premium paid was intended to compensate Jon Shen for all the good things he had done for the company over the years. Management booked the property at $300,000, and $450,000 as compensation expense for the company.

Required:
a. Suppose you are hired by an accounting firm to audit the financial statements of MINID for the fiscal year 2013. Discuss the appropriateness of the accounting treatments with regard to the acquisition of the above-mentioned properties.
b. Publicly traded companies are usually under pressure to maximize income and to increase shareholder wealth. Why do you think MINID is motivated to decrease its earnings for reasons other than tax?