The Wall Street Journal reported, For more than ten year, IBM has quietly turned to Merrill Lynch
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REQUIRED:
a. Discuss how using an aggressive method to recognize revenue, like the one just described, might affect IBM’s reputation as “the epitome of financial conservatism.”
b. Discuss some of the economic consequences associated with the use of such a method, mentioning some of the benefits and costs affecting IBM and its management.
c. The article mentions later that IBM requires all employees to swear that they have read the IBM “Business Conduct Guidelines” manual that warns them against not only reporting information inaccurately but also organizing it in a way that is intended to mislead or misinform. Comment on whether this policy is consistent with the use of the aggressive revenue recognition method mentioned above.
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