A widely recognized financial trick known as the "big bath" occurs when a company make huge unwarranted asset write-offs that drastically overstate expenses. Outside auditors (CPAs) permit companies to engage in the practice because the assets being written off are of questionable value. Because the true value of the assets cannot be validated, auditors have little recourse but to accept the valuating suggested by management. Recent example of write-offs include Motorola's $1.8 billion restructuring charge, Hewlett-Packard's $8 billion charge, and Microsoft's $7.6 billion charge. Required a. Why would managers want their companies to take a big bath? (Hint: Consider how a big bath affects return on investment and residual income in the years following the write-off). b. Annual reports are financial reports issued to the public. The reports are the responsibility of auditors who are CPAs who operate under the ethical standards promulgated by the American Institute of Certified Public Accountants. As a result attempts to manipulate annual report data are not restricted by the Institute of Management Accounting Statement of Ethical Professional Practice shown in Exhibit 1.17 of Chapter1. Do you agree or disagree with these statements? Explain your position. Please provide your responses to the above requirements and comment on your group members' responses constructively. A widely recognized financial trick known as the "big bath" occurs when a company make huge unwarranted asset write-offs that drastically overstate expenses. Outside auditors (CPAs) permit companies to engage in the practice because the assets being written off are of questionable value. Because the true value of the assets cannot be validated, auditors have little recourse but to accept the valuating suggested by management. Recent example of write-offs include Motorola's $1.8 billion restructuring charge, Hewlett-Packard's $8 billion charge, and Microsoft's $7.6 billion charge. Required a. Why would managers want their companies to take a big bath? (Hint: Consider how a big bath affects return on investment and residual income in the years following the write-off). b. Annual reports are financial reports issued to the public. The reports are the responsibility of auditors who are CPAs who operate under the ethical standards promulgated by the American Institute of Certified Public Accountants. As a result attempts to manipulate annual report data are not restricted by the Institute of Management Accounting Statement of Ethical Professional Practice shown in Exhibit 1.17 of Chapter1. Do you agree or disagree with these statements? Explain your position. Please provide your responses to the above requirements and comment on your group members' responses constructively