Part 2: Plant Assets

Managers of publicly traded companies are under constant pressure to meet or exceed Wall Street analysts' earnings projections from stockholders and creditors, so that stock prices will increase and thus the value of stock options will be increased. Some corporate officials turn to earnings management practices in order to artificially achieve the desired results. Answer the following questions in regard to these practices: Is changing depreciation methods for plant assets an effective tool for managing earnings? Explain.

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