The following information was taken from the annual report of Sega-Venus Enterprises:a. Compute Sega-Venus€™s conservatism ratio, and comment on how conservative the company€™s reporting methods are.
b. Explain why the conservatism ratio provides a measure of the extent to which a company€™s financial accounting methods are conservative, and provide examples of accounting treatments that may increase or decrease the ratio.

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2016 2017 BALANCE SHEET $ 18,300 $19,400 Deferred income tax INCOME STATEMENT $145,500 Income before taxes Income tax expense (54,000) $ 91,500 Net income Effective income tax rate: 34%