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Companies That Find Themselves with Poor Earnings in a Certain

Question 37

Essay

Companies that find themselves with poor earnings in a certain year will often decide to take a "big bath".
Required:
Explain what a "big bath" is and the motivation behind it.Why does this type of earnings management "tread very close to the line of ethical reporting"?

Correct Answer:

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When a company has a loss year,there is ...

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