Accounting Harnischfeger Corporation Case Essay

From Financial Note 2, we make out that, in 1984, the corporation had computed depreciation expenses on plants, machinery and equipment using straight-line manner for financial insurance coverage purpose. Prior to 1984, the corporation used mainly accelerated rules for its U.S operating plants.The accumulative way out of this change, which was applied retroactively to all assets previously subjected to accelerated depreciation, increased realise income for 1984 by $11.0 million or $0.93per joint and common equivalent shargon. The impact of the new method on income for the year 1984 before the cumulative effect was insignificant. Answer number 2 I can also signalise changes is the following Changes in the sales calculation, by including the re-sales of products from Kobe Steel Ltd company in the throne sales Changes in the depreciation method mentioned beforeLIFO inventories liquidation boosted the net income by $2.4MM The effect from changes in adjustment for doubtful acc ountsThe funding of R&D expenses by Kobe Steel Ltd companyThe reconstitute of the pension plan reducing the expenses by $4.0MM I believe the net income could engage been roughly around $17.3MM Net harm Answer number 3 the reasons I think why management make this changes within the company are approximately of the executive board members hold most shares of the corporation. Evidently, a better net income would spend a penny booted the price of share. There was a 40% compensation opportunity for nearly on the most decision settle members by the end of the year in case of the company exceeds the expectation. There are several requirements the company needs to mate in order to keep the tierce year loan agreement for its works capital.