Suppose that you are the accounting manager of a division in a large company and your remuneration is based partly on meeting an earnings target. In the current year, it seems certain that your division will not meet its target.
You have some equipment that has been idle for a while but has not yet been written off. What incentives do you have to write off this asset during the current year? If you do write it off, how will this affect your future ability to meet the earnings targets for your division?