Discussion on Accounting Errors
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Locate an article from a financial periodical from the past 2 years about a company that restated its financial statements due to an error in accounting principal. Examples of periodicals are CFO and Journal of Accountancy.
Write a paper of no more than 700 words with references discussing the restatement of the company, the accounting principals involved, the effect of errors and changes on financial statements, and the affect on the stockholders.
Format your paper consistent with APA guidelines.
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Solution Summary
Changes because of accounting errors are discussed step-by-step in this solution. The response also has the sources used.
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In accordance with BrainMass standards, this is not a hand in ready paper but only background help.
Step 1
The article from a financial journal is "Did Hertz CFO Leave Because of Accounting Flubs? ", The article is from CFO and the date of the article is June 6, 2014.
Step 2
The article says that it will restate three years of financials to correct at least $46.3 million worth of errors in its 2011 statements. The errors are related to several company activities. The errors identified relate to capitalization and timing of depreciation for non-fleet assets, allowances for doubtful accounts in Brazil and other items. In addition, the company identified additional errors related to allowances for uncollectable amounts with respect to renter obligations for damaged vehicles and restoration obligations at the end of facility leases.
Step 3
The first principle involved is that of capitalization of assets. Capitalizing a cost has two impacts on the financial statements of a company. Capitalization allows the business to increase its assets on its balance sheet. Capitalization also increases the company's profits by reducing expenses. The accounting principle ...
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