Question: Companies often are under pressure to meet or beat Wall Street earnings projections in order to increase stock prices and also to increase the value of stock options. Some resort to earnings management practices to artificially create desired results.
Required: 1. How can a company increase earnings by changing its depreciation method?
2. How can a company increase earnings by changing the estimated service lives of depreciable assets? 3. How can a company increase earnings by changing the estimated residual value of depreciable assets?