Situation: This is a normal end-of the-year management meeting (no external or internal auditors present) where you are about to discuss some accounting issues as they relate to your previously announced earnings guidance given to Analysts and Investors (hereafter referred to as the market) and your current end-of year financial situation. Specifically, six months ago you communicated to the market that your annual earnings per share (EPS) would be 80 cents. However; upon closing the books, it is obvious that you are short since after the preliminary unadjusted financial statements show 60 cents per share. This is an uncomfortable situation because not meeting the 80 cent EPS number will cause the stock price to decrease by at least 25 percent, something that you would like to avoid, if possible.

Analyze and critically evaluate each situation and develop an appropriate strategy using various accounting techniques, appropriate accounting standards, legal and ethical decision making, to reach the 80 cents based on the scenarios/discussion items below and the discussion that took place in class. Complete a short reconciliation, which shows what adjustments you want to make. Please be careful in how you adjust the numbers as some items are already included in the 60 cents and some are not. Cents means cents per share. Current fiscal year means the year you are analyzing.

Answer the following

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.

Spread over all the number of years and then change substance of transaction so it will last longer.

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.