HomeworkLib
Question

ABC Inc. is going to acquire XYZ Corp. during the third quarter of this year. ABC...

ABC Inc. is going to acquire XYZ Corp. during the third quarter of this year. ABC has instructed XYZ to pay any and all of its expenses, including expenses that are not yet due, during the second quarter of this year, before the acquisition is completed. This is an earnings management technique known as:

Group of answer choices:

smoothing earnings

mark-to-market accounting

channel stuffing

spring loading

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

This is an earnings management technique known as: Channel stuffing.

Channel stuffing is a practice followed by companies for deceptive reporting of its earnings deliberately. In the given case ABC instructs XYZ to pay for expenses that are not yet due before acquisition completion.

So answer is Channel stuffing

0 0
Add a comment
Know the answer?
Add Answer to:
ABC Inc. is going to acquire XYZ Corp. during the third quarter of this year. ABC...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began...

    The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Exhibit 16-6. XYZ corp. Book Income Income statement For current year Revenue from sales $ 40,000,000 Cost of Goods Sold (27,000,000 ) Gross profit $ 13,000,000 Other income: Income from investment in corporate stock 300,000 1 Interest income...

  • XYZ is a calendar-year corporation that began business on January 1, 2020.

    XYZ is a calendar-year corporation that began business on January 1, 2020. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. XYZ corp.BookIncomeIncome statementFor current yearRevenue from sales$40,000,000Cost of Goods Sold(27,000,000)Gross profit$13,000,000Other income:Income from investment in corporate stock300,0001Interest income20,0002Capital gains (losses)(4,000)Gain or loss from disposition of fixed assets3,0003Miscellaneous income50,000Gross Income$13,369,000Expenses:Compensation(7,500,000)4Stock option compensation(200,000)5Advertising(1,350,000)Repairs and Maintenance(75,000)Rent(22,000)Bad Debt expense(41,000)6Depreciation(1,400,000)7Warranty expenses(70,000)8Charitable donations(500,000)9Meals(18,000)Goodwill impairment(30,000)10Organizational expenditures(44,000)11Other expenses(140,000)12Total expenses$(11,390,000)Income before taxes$1,979,000Provision for income...

  • [The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began...

    [The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Exhibit 16-6. XYZ corp. Book Income Income statement For current year Revenue from sales $ 40,000,000 Cost of Goods Sold (27,000,000 ) Gross profit $ 13,000,000 Other income: Income from investment in corporate stock 300,000 1 Interest income...

  • XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported...

    XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Exhibit 16-6. XYZ corp. Book Income Income statement For current year Revenue from sales $ 40,000,000 Cost of Goods Sold (27,000,000 ) Gross profit $ 13,000,000 Other income: Income from investment in corporate stock 300,000 1 Interest income 20,000 2 Capital gains (losses) (4,000 ) Gain or...

  • [The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began...

    [The following information applies to the questions displayed below.] XYZ is a calendar-year corporation that began business on January 1, 2018. For the year, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Use Exhibit 16-6. XYZ corp. Book Income Income statement For current year Revenue from sales $ 40,000,000 Cost of Goods Sold (27,000,000 ) Gross profit $ 13,000,000 Other income: Income from investment in corporate stock 300,000 1...

  • XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported...

    XYZ is a calendar-year corporation that began business on January 1, 2017. For 2018, it reported the following information in its current-year audited income statement. Notes with important tax information are provided below. Exhibit 16-6. XYZ corp. Book Income Income statement For current year Revenue from sales $ 40,000,000 Cost of Goods Sold (27,000,000 ) Gross profit $ 13,000,000 Other income: Income from investment in corporate stock 300,000 1 Interest income 20,000 2 Capital gains (losses) (4,000 ) Gain or...

  • Jay, Inc., a party rental business, completed its third year of operations on December 31. Because...

    Jay, Inc., a party rental business, completed its third year of operations on December 31. Because this is the end of the annual accounting period, the company bookkeeper prepared the following tentative income statement:    Income Statement Rent revenue $ 102,000 Expenses: Salaries and wages expense 25,800 Maintenance expense 10,300 Rent expense 7,600 Utilities expense 3,700 Gas and oil expense 2,200 Miscellaneous expenses (items not listed elsewhere) 1,100 Total expenses 50,700 Income $ 51,300 You are an independent CPA hired...

  • ORIGINAL ENTRIES 1. Galle Inc. entered into the following transactions during January. a. January 1: Borrowed...

    ORIGINAL ENTRIES 1. Galle Inc. entered into the following transactions during January. a. January 1: Borrowed $50,000 from First Street Bank by signing a note payable. b. January 4: Purchased $25,000 of equipment for cash. C. January 6: Paid $500 to landlord for rent for January. d. January 15: Performed services for customers on account, $10,000. e. January 25: Collected $3,000 from customers for services performed in Transaction d. 1. January 30: Paid salaries of $2,500 for the current month....

  • Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, Year 1,...

    Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, Year 1, were as follows: Record on journal page 10: Jan. 3 Issued 15,000 shares of $20 par common stock at $30, receiving cash. Feb. 15 Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash. May 1 Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. 16 Declared a quarterly dividend of $0.50 per share on common stock and...

  • MULTIPLE-CHOICE questions E1-1.ABC Engineering use cost method to cart engineering use cost method to calculate the...

    MULTIPLE-CHOICE questions E1-1.ABC Engineering use cost method to cart engineering use cost method to calculate the stage of completion of its construction act. Total estimated contract costs of their contract are $100 million. In the first year of their contract, ABC Engineering has incurred the following costs: Cost of purchase of raw materials worth $10 million ($5 million of which are unused by the year end) 2. Payment of salaries and wages of $5 million ($1 million of accrued salaries...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT