homie

I think of it this way:

Q: What is the status of the case of Mr. A vs the State?

I. The case is dismissed
II. Mr A is not guilty
III. We are still looking into it
IV. Mr A is guilty

Which statement was worthless? Definitely III


ba736 Wrote:
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> Select the three most useful types of discussions
> regarding the impact of recently issued accounting
> changes in management's discussion.
> I. The standard does not apply.
> II. The standard will have no material impact.
> III. Management is still evaluating the impact.
> IV. The impact of adoption is discussed.
>
> A. I, II and III.
> B. I, II and IV.
> C. II, III and IV.
>
> Awnser is B, I picked C
>
> Explanation: III creates some uncertainty about
> whether the change might materially affect the
> company.
>
> I disagree with not including III and the
> explanation given. In the real world an analyst
> can gain a lot of insight into managements thought
> process for a number of reasons.
>
> For one you could tell that they are aware of the
> upcoming change but because of the wording “the”
> there WILL be an impact presumably material. I say
> presumably because if their evaluation determines
> that there is no impact then they would add either
> option I or II. Wouldn’t that addition be material
> information?
>
> Also the fact that they are still evaluating the
> impact could signal that they were caught behind
> the curve in recognizing and planning for
> accounting changes before they are issued. At the
> extreme this could point towards incompetence if
> the change isn’t that complicated. It’s not like
> these accounting changes come out of left field.
>
> Additionally, if they don’t address it at all they
> could be trying to not bring attention to a
> negative material impact on their next filling.
> Wouldn’t this go back to that chapter about
> management shenanigans?
>
> Why is choice I so important. Wouldn’t that be
> akin to adding the safe harbor statement anytime
> management is going to make forward looking
> remarks. What if the standard setters go buck wild
> one year and make a ton of changes.