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    jlynnr22's Avatar
    jlynnr22 Posts: 2, Reputation: 1
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    May 30, 2012, 06:42 PM
    Problem 9.3a for financial accounting
    Smart hardware has two conflicting objectives. Management wants to report the highest possible earnings in its financial statements, yet it also wants to minimize its taxable income reported to the IRS. Need to explain how both of these objectives can be met.
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    May 30, 2012, 06:46 PM
    Quote Originally Posted by jlynnr22 View Post
    smart hardware has two conflicting objectives. management wants to report the highest possible earnings in its financial statements, yet it also wants to minimize its taxable income reported to the IRS. Need to explain how both of these objectives can be met.
    Truth and integrity these are the hallmarks of accounting, schemeing to do this sort of thing inevietably has reprocussions in later reporting periods. There are various legitimate methods for improving reported income and tax law may not treat various transactions in the same way as financial reporting. Depreciation and assessing the useful life of assets, valuation of assets, but tax should never drive the business. Tax law may permit early write off some assets
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