Which of the following is an example of managing earnings down?
A) Changing estimated bad debts from 3 percent to 2.5 percent of sales.
B) Revising the estimated life of equipment from 10 years to 8 years.
C) Not writing off obsolete inventory.
D) Reducing research and development expenditures.

Question

Quizplus · Accepted Answer

Revising the estimated life of equipment from 10 years to 8 years increases depreciation expense in the current period, which reduces reported earnings. This is an example of managing earnings down.

Which of the Following Is an Example of Managing Earnings