Ethics: Changes in Estimate<\/p>\n
Mike Crane is an audit senior of a large public accounting firm who has just been<\/p>\n
assigned to the Frost Corporation\u2019s annual audit engagement. Frost has been a client of<\/p>\n
Crane\u2019s firm for many years. Frost is a fast-growing business in the commercial<\/p>\n
construction industry. In reviewing the fixed asset ledger, Crane discovered a series of<\/p>\n
unusual accounting changes, in which the useful lives of assets, depreciated using the<\/p>\n
straight-line method, were substantially lowered near the midpoint of the original<\/p>\n
estimate. For example, the useful life of one dump truck was changed from 10 to 6<\/p>\n
years during its fifth year of service. Upon further investigation, Mike was told by Kevin<\/p>\n
James, Frost\u2019s accounting manager, \u201cI don\u2019t really see your problem. After all, it\u2019s<\/p>\n
perfectly legal to change an accounting estimate. Besides, our CEO likes to see big<\/p>\n
earnings!\u201d<\/p>\n
Answer the following questions in the Discussion Board:<\/p>\n
a. What are the ethical issues concerning Frost\u2019s practice of changing the useful<\/p>\n
lives of fixed assets?<\/p>\n
b. Who could be harmed by Frost\u2019s unusual accounting changes?<\/p>\n
c. What should Crane do in this situation?<\/p>\n
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2016). Accounting changes and error<\/p>\n
analysis. Intermediate accounting (16th ed.). (p. 1323). New York, NY: John Wiley &<\/p>\n
Sons, Inc.<\/p>\n","protected":false},"excerpt":{"rendered":"
Ethics: Changes in Estimate Mike Crane is an audit senior of a large public accounting firm who has just been assigned to the Frost Corporation\u2019s annual audit engagement. Frost has been a client of Crane\u2019s firm for many years. Frost is a fast-growing business in the commercial construction industry. In reviewing the fixed asset ledger, […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-3486","post","type-post","status-publish","format-standard","hentry","category-government-5"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/3486","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=3486"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/3486\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=3486"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=3486"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=3486"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}