Question: (Based on an article by nationally syndicated columnist Michael Kinsley). Michael Kinsley chides both Halliburton Corporation, a large construction company, and its auditor, Arthur Andersen, for allowing Halliburton to book a percentage of cost overruns that Halliburton has attempted to collect from Until 1998 cost overrun collections were not booked until received. Since that time Halliburton "began guessing how much of a disputed surcharge would ultimately get paid and crediting itself in advance."
Required: a. Is there a case that can be made for allowing Halliburton to book these overruns? whar arguments, if any, support Halliburtons accounting methods?
b. What situations should prevent Halliburton from booking these overruns prior to collection?