PLEASE SOLVEEEE IT AS SOOOONNN AS POSSIBLEEEEEEEE

Earnings Management Exercise Objective: Maximize Earnings Unadjusted EPS Number = 60 cents per share. The goal is to get to 90 cents a share. EPS = Earnings per share, which is simply income over number of shares outstanding. Note: be careful in adjusting the EPS number because it depends on the direction of the adjustment and if it is included in the EPS number or not. For example, if the sentence states that 5 cents have already been deducted as an expense, this means that if we reverse it (add back), instead of having a 60-cent profit, we would have a 65 cent profit. . . ANA's warehouse in Bend, Oregon, has been damaged resulting from a blizzard. The snow was heavy and damaged the roof, but the facility is still usable. There are two solutions: repair or replace the roof. The repair cost is estimated to be 5 cents per share (included in the 60-cent number). However, the extent of the damage has yet to be decided with reasonable certainty. Also, due to condition of the original roof, you were planning to replace the roof in the next 24 months, regardless. The new roof will extend the use of the building by 10 years. Upon replacing the roof, depreciation expense will increase by 1 cent per year. ANA Corporation is facing a crisis: one of their products, a diet food that is normally green, is turning brown. There are no other issues, i.e. no difference in flavor or safety. ANA's Controller has included a 6 cent write down (expense) related to the product problem assuming that all customers return the product. An analysis shows that only about half of the customers are returning the product and ANA has recently come up with a counter measure that seems to be eliminating the problem. Six cents have been deducted from the non-adjusted EPS number (the 60 cents). The company has embarked on a social media campaign to increase the awareness of non-GMO products. The cost this year amounts to 6 cents per share, which is included in the non-adjusted EPS number based on the conservatism principle. The program is expected to run for three years. The company incurred unusually heavy maintenance of 4 cents, all of which was charged to the current year. While it is uncertain if this maintenance will prolong the life of the machinery, the senior engineer of the company feels that overall maintenance will be reduced by 1 cent per year over the next four years. ANA is in process of moving its European HQ from London (UK) to Amsterdam (Holland) at a cost of 6 cents per share, none of which is included in the 60 cent per share unadjusted number. The company is being affected by BREXIT. The Controller is estimating that 4 cents per year for the next two years is required to handle the extra work/expenses associated with doing business in the UK. Currently, 4 cent has been deducted as an expense to cover this cost. The company has a 4 cent per share unused general rainy-day fund that is currently unused. The four cents were not used in the past year. The company purchased a building and land on January 1 of the current fiscal year. The combined purchase price was $100 million, of which $80 million was allocated to the building. The company decides to depreciate the building over a 20-year period, or 4 cents per share per year. Independent appraisals range from $40 to $80 million for the building. The company has an investment in Russia, which it accounts for using the cost method because the Russian partner has control over day-to-day operations via a management agreement. This means that the company shows income when they receive the cash payment or when the Russian company is legally obligated to pay the dividend. In the previous five years, the Russian company has generated 10 cents per share in revenue/dividend, 60 percent of which belongs to ANA. Russia has some strict currency transfer restrictions so ANA historically recognized revenue when the cash is received. At the end of the year, none of the cash had been received but the Russian operation had a terrific year. The company has certain short-term (2-year) contracts where it recognizes revenue at the end of the contract. This is due to warranty clauses existing in these contracts where ANA is required to remedy any and all problems related to the contract. Currently, if the company is able to split the revenue and the warranty expense, it would have a positive 2 cent per share impact in the current fiscal year. How would the company be able to split the revenue recognition in such a way that the firm can show the 2 cents of earnings impact this year? ANA purchased a UK company in the beginning of the current year. Upon doing additional due diligence, the internal auditors found that some inventory and equipment needed to be written off, totaling 4 cents. None of this was charged to the current quarter. Related Questions: The company purchased a villa in Denmark last year, which they will use as an educational facility. The building is built of limestone, except for the roof, which is made out of straw. How should the building be depreciated? Earnings Management Exercise Objective: Maximize Earnings Unadjusted EPS Number = 60 cents per share. The goal is to get to 90 cents a share. EPS = Earnings per share, which is simply income over number of shares outstanding. Note: be careful in adjusting the EPS number because it depends on the direction of the adjustment and if it is included in the EPS number or not. For example, if the sentence states that 5 cents have already been deducted as an expense, this means that if we reverse it (add back), instead of having a 60-cent profit, we would have a 65 cent profit. . . ANA's warehouse in Bend, Oregon, has been damaged resulting from a blizzard. The snow was heavy and damaged the roof, but the facility is still usable. There are two solutions: repair or replace the roof. The repair cost is estimated to be 5 cents per share (included in the 60-cent number). However, the extent of the damage has yet to be decided with reasonable certainty. Also, due to condition of the original roof, you were planning to replace the roof in the next 24 months, regardless. The new roof will extend the use of the building by 10 years. Upon replacing the roof, depreciation expense will increase by 1 cent per year. ANA Corporation is facing a crisis: one of their products, a diet food that is normally green, is turning brown. There are no other issues, i.e. no difference in flavor or safety. ANA's Controller has included a 6 cent write down (expense) related to the product problem assuming that all customers return the product. An analysis shows that only about half of the customers are returning the product and ANA has recently come up with a counter measure that seems to be eliminating the problem. Six cents have been deducted from the non-adjusted EPS number (the 60 cents). The company has embarked on a social media campaign to increase the awareness of non-GMO products. The cost this year amounts to 6 cents per share, which is included in the non-adjusted EPS number based on the conservatism principle. The program is expected to run for three years. The company incurred unusually heavy maintenance of 4 cents, all of which was charged to the current year. While it is uncertain if this maintenance will prolong the life of the machinery, the senior engineer of the company feels that overall maintenance will be reduced by 1 cent per year over the next four years. ANA is in process of moving its European HQ from London (UK) to Amsterdam (Holland) at a cost of 6 cents per share, none of which is included in the 60 cent per share unadjusted number. The company is being affected by BREXIT. The Controller is estimating that 4 cents per year for the next two years is required to handle the extra work/expenses associated with doing business in the UK. Currently, 4 cent has been deducted as an expense to cover this cost. The company has a 4 cent per share unused general rainy-day fund that is currently unused. The four cents were not used in the past year. The company purchased a building and land on January 1 of the current fiscal year. The combined purchase price was $100 million, of which $80 million was allocated to the building. The company decides to depreciate the building over a 20-year period, or 4 cents per share per year. Independent appraisals range from $40 to $80 million for the building. The company has an investment in Russia, which it accounts for using the cost method because the Russian partner has control over day-to-day operations via a management agreement. This means that the company shows income when they receive the cash payment or when the Russian company is legally obligated to pay the dividend. In the previous five years, the Russian company has generated 10 cents per share in revenue/dividend, 60 percent of which belongs to ANA. Russia has some strict currency transfer restrictions so ANA historically recognized revenue when the cash is received. At the end of the year, none of the cash had been received but the Russian operation had a terrific year. The company has certain short-term (2-year) contracts where it recognizes revenue at the end of the contract. This is due to warranty clauses existing in these contracts where ANA is required to remedy any and all problems related to the contract. Currently, if the company is able to split the revenue and the warranty expense, it would have a positive 2 cent per share impact in the current fiscal year. How would the company be able to split the revenue recognition in such a way that the firm can show the 2 cents of earnings impact this year? ANA purchased a UK company in the beginning of the current year. Upon doing additional due diligence, the internal auditors found that some inventory and equipment needed to be written off, totaling 4 cents. None of this was charged to the current quarter. Related Questions: The company purchased a villa in Denmark last year, which they will use as an educational facility. The building is built of limestone, except for the roof, which is made out of straw. How should the building be depreciated