Screen Microtech case study

a.) Your team of financial analysts has been asked to prepare a fair, unbiased assessment of SMIs financial performance prior to its IPO. Based on your review and analysis, write a short report to senior management, addressing each key accounting transaction described in the case:

• Provision for Returns -
• Returns Allowances -
• Research and Development (R&D) Expense -
• Gain on Sale -
• Depreciation
• Major Shipment Damage and Delay

b.) Show the impact of all these transactions on the net income for the company in 2015 if the adjustments were made based on your assessments. (16 marks)

c.) Is SMIs accounting ethical? Does it feature earnings management or earnings manipulation? What is the difference between the two, if any? (4 marks)