Accounting Harnischfeger Corporation Case Essay

From Financial Note 2, we contend that, in 1984, the corporation had computed depreciation expenses on plants, machinery and equipment using straight-line mode for pecuniary reporting purpose. Prior to 1984, the corporation used principally accelerate methods for its U.S in operation(p) plants.The cumulative effect of this change, which was applied retroactively to all assets previously subjected to accelerated depreciation, increased net income for 1984 by $11.0 million or $0.93per green and common equivalent share. The impact of the new method on income for the yr 1984 out front the cumulative effect was insignifi deposet. Answer number 2 I can also identify changes is the following Changes in the sales calculation, by including the re-sales of products from Kobe trade name Ltd company in the Corporation sales Changes in the depreciation method mentioned beforeLIFO inventories liquidation boosted the net income by $2.4MM The effect from changes in allowance for doubtful ac countsThe funding of R&D expenses by Kobe brand Ltd companyThe restructure of the pension plan reducing the expenses by $4.0MM I believe the net income could have been roughly around $17.3MM Net spillage Answer number 3 the reasons I think why counseling made this changes within the company are Some of the executive dining table members hold some(a) shares of the corporation. Evidently, a better net income would have boot the price of share. There was a 40% compensation opportunity for some on the most decision influence members by the end of the form in case of the company exceeds the expectation. There are several requirements the company needs to meet in order to keep the three year loan agreement for its working capital.