Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Use financial statements of Quest Diagnostics in fiscal year 2017 and answer the following questions: 10-K FORM HERE https://www.sec.gov/Archives/edgar/data/1022079/000102207918000038/dgx1231201710-k.htm Discretion: how much Bad Debt Expense

Use financial statements of Quest Diagnostics in fiscal year 2017 and answer the following questions:

10-K FORM HERE https://www.sec.gov/Archives/edgar/data/1022079/000102207918000038/dgx1231201710-k.htm

Discretion: how much Bad Debt Expense (BDE) to record?

Under GAAP, Quest has discretion regarding the amount of bad debt expense to record each year, as long as the resulting financial statements fairly present in all material respects the company's financial position and results of operations to readers of the statements

Consider the following two options for Quest in 2018, assuming sales, receivables and expenses similar to those in 2017. Case (i): Record Bad Debt Expense of $315m as in 2017. Case (ii): Record Bad Debt Expense of only $115m (bias their recorded expense down)

What will be the 2018 operating income for these two options?

What inferences might readers of the financial statements draw from the case (ii) operating income numbers relative to 2017? Why might a company consider case (ii)? Why not?

Revenue Recognition

When/how does Quest recognize its revenue? Do you see any potential risk associated with this process?

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_2

Step: 3

blur-text-image_3

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

Accounting Equations & Answers

Authors: Barcharts, BarCharts Inc

1st Edition

1423218248, 9781423218241

More Books

Students also viewed these Accounting questions

Question

8. What are the costs of collecting the information?

Answered: 1 week ago