Entities may have a variety of corporate reporting objectives specific to their circumstances, such as: 

a. an Assessing and predicting cash flows; 

b Minimizing current income taxes; 

c Complying with restrictive covenants (specifically, debt covenants that specify minimum levels of shareholders’ equity); 

d Evaluating management’s performance. 

Required: 

For each of the accounting policies listed below, indicate which objectives of corporate reporting are best served. Each policy may serve more than one objective.

1 Capitalize and amortize development costs.

2 Disclose potential lawsuits against the company.

3 Defer expenses to match them against revenue generated from the activity.

4 Delay recognizing revenue as long as possible.

5 Write off goodwill.

Answer rating: 100% (QA)

Entities may have a variety of corporate reporting objectives s... View the full answer