You are the controller for Rosie Company. Rosie has just acquired another company and it is your
Question:
Rosie Companys CEO, who has absolutely no personal ethics, has instructed you to allocate the purchase price to show big earnings growth in the next few years. The CEO doesnt care what earnings are reported this year because any losses can be blamed on the effort to integrate the newly acquired company. The CEO also wants your allocation to give the company maximum flexibility to manage earnings to show consistently increasing earnings in future years. Which allocation, 1 or 2, and which depreciation lives for the building and machinery should you choose to accomplish the CEOs directive? (Ignore income tax considerations.) What concerns should you have about thisrequest?
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0324312140
16th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen