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In a massive fraud by Worldcom, $3.1 billion of 2001 line access charges were classified as assets when they should instead have been classified
In a massive fraud by Worldcom, $3.1 billion of 2001 line access charges were classified as assets when they should instead have been classified as expenses. Using those fraudulent numbers, Worldcom reported net income of $1.4 billion and total assets of $103.9 billion for 2001. We define return on assets (ROA) as net income divided by total assets. a. Calculate Worldcom's 2001 ROA using its fraudulent, reported numbers (round to three decimal places). 1.347% b. Calculate what Worldcom would have reported for total assets if it had accounted for line access charges properly. Ignore any potential tax implications and provide your answer in billions to one decimal point, to conform with the original report. -1.687% c Calculate what Worldcom would have reported as net income if it had accounted for line access charges properly. Ignore any potential tax implications and provide your answer in billions to one decimal point, to conform with the original report. d. Calculate Worldcom's 2001 ROA as if it had accounted for the tine access charges properly (ignore any potential tax implications and round to three decimal places).
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