You are the Controller of Harmon Oil, a medium$-$sized oil exploration company in Texas.$$ It is time to make a forecast of the company$$s annual earnings. You know that additional losses will be recognized before the company prepares its financial statements. Information on the magnitude of the losses is still in the process of being determined.

The President of Harmon Oil has asked you to ignore the additional losses.$$ He argues that the losses have not occurred and the information that you are providing is an estimate, so precision is not required.$$ The President knows that if the forecasted numbers are lower$-$than$-$expected, the company will not be able to obtain a loan from the bank, the loan is desperately needed.$$ The loan will fund before the actual earnings are realized