A 2010 study on fraudulent financial reporting by COSO notes ways in which long-lived assets can be

Question:

A 2010 study on fraudulent financial reporting by COSO notes ways in which long-lived assets can be fraudulently overstated, including:

● Fictitious assets on the books (WorldCom)

● Improper and incomplete depreciation (Waste Management)

● Failure to record impairment of assets, especially goodwill (Sun Microsystems)

● Expired or worthless assets left on a company's books (Millacron)

● Assets overvalued upon acquisition, especially in the purchase of a company (WorldCom)

a. What might motivate management to overstate fixed assets?

b. What other factors should the auditor consider when assessing fraud risk related to long-lived assets?

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...