disiz64

Question 1:

I think the idea behind management's executives are to lower their earnings so that they can get government to fend off foreign competitions, use as an excuse not to raise wage and to negotiate for better terms (Late payment is better than no payment). I would also think that the likelihood for stock price to rise is higher when public know of the tax break given and the company's success in winning the labour war.

Question 2:

I think answer should be A. B indicates opportunity while C indicates pressures in the fraud triangle.

Question 3:

In the book, it says that unit-of-production method will results in low quality of earning if depreciation expense is lower in the early years compared to the other 2 method, resulting in higher earning which is of low quality. I would have chosen C arguing that outdated technology system will probably end up with lower earning but its still of good quality.