Concept explainers
Long term Assets:
Long term assets are assets that can be held for a longer period of time and cannot be easily converted to cash. They are also known as non-current assets. The long term asset includes the property, plant and equipment, long term investments and intangible assets.
To discuss: The primary method that Company W used to carry out the fraud.
Explanation of Solution
Company W uses the telecommunication lines of other company. Though company W paid for the service, the company has to record it as an operating expense under the income statement. But Company W purposely recorded it as a long term assets in its balance sheet. This fraudulent activity overstates the net income by 11 billion.
Thus, the primary method that Company W used to carry out the fraud is explained above.
Want to see more full solutions like this?
Chapter 7 Solutions
Financial Accounting
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education