Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ethics Violated Which ethical theory has been used to assess the case involved. How ethics have been violated 5.1. The Microsoft Case Following the anti-trust

Ethics Violated

  • Which ethical theory has been used to assess the case involved.
  • How ethics have been violated

image text in transcribed
5.1. The Microsoft Case Following the anti-trust investigation by the U.S. attorney general, Microsoft failed to recognize revenue as earned. This is perhaps an example of unacceptable highly conservative earnings management showing that not all earnings management practices involve overstatements. The Securities and Exchange Commission (SEC) alleged that Microsoft's accounting practices from July 1994 through June 1998 caused its income to be substantially misstated. Microsoft failed to accurately report its financial results, causing overstatements of income in some quarters and understatements of income during other quarters. The SEC said that Microsoft enhanced its financial results by setting aside artificially large reserves to reduce revenues, with the idea of reversing that procedure to record the revenues in less profitable times. The reserves totaled between $200 million and $900 million during the period in question. The SEC criticized the use of such so-called 'cookie- jar' reserves, which can give investors an inaccurate picture of the company's current financial performance. Under a settlement with the Securities and Exchange Commission, Microsoft has agreed to refrain from accounting violations to settle federal regulators' allegations that it misrepresented its financial performance. 32 Needles Jr. B.E., Powers M., Senyigit Y.B. Under the settlement, Microsoft neither admitted nor denied wrongdoing and no fine was imposed (USA Today, 2002)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essential Criminal Law

Authors: Matthew Lippman

3rd Edition

154435598X, 978-1544355986

More Books

Students also viewed these Law questions