View Homework Help – Harnischferger Case from ACG at Florida International University. Harnischfeger Corporation 1. Describe clearly the accounting. Agenda Case Facts Strategy Analysis Accounting Analysis. Directions Read the “Harnischfeger Corp” case study and answer the following questions. Submit your completed assignment no later than the last day of Week .

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The instructor should ask the class to identify the latter-type decisions among the above. Also, profit margin dropped from 1. This change should report higher profits in the coming years.

How to Write a Summary of an Article? Home Papers Harnischfeger Corporation. Inan estimate of 6. In my opinion, the changed accounting format highlights the effectiveness of our strategy better than the old policies do. The accounting studies that examine the stock market reaction to accounting changes conclude that the market is not fooled by the accounting decisions of firms. The company established a new plan, which goal was an improvement in the minimum pension benefit.

My own belief is that people adjust for the obvious things like one-time gains and losses but have difficulty in adjusting for ongoing differences.

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Registration Forgot your password? There is no income tax effect. I am not sure whether people make the adjustments or not, but either way we wish to present an optimistic version of the picture and let people figure out what to do with the numbers.

Change in the use LIFO liquidation in corporatkon valuation. How to Write a Critical Analysis. The depreciation policy for financial reporting purposes was changed to a straight-line method from a principally accelerated method.

Even if capital markets see through the effects of accounting changes, managers may believe otherwise in making accounting decisions.


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The company reported that Harnischfeger Engineers received a major order for the design of an automated car assembly plant. We would like to tell the world that we are alive and well. Feedback Privacy Policy Feedback.

Low Similar price and Performance Consumers willingness to switch products -Low. The same underlying reality can be accounted for using a range of assumptions. See Exhibit 4, Note 2, in the case. There is considerable evidence in finance and accounting literature that shows that the capital markets are generally efficient. As a company you have to put the best foot forward if you want to raise capital, convince customers that you are a viable company, and attract talented people to work for the company.

Describe clearly the accounting changes Harnischfeger made in as stated in Note 2 of its financial statements. Boost stock price to raise new capital Meet earnings targets for compensation Avoid violating debt covenants Improve image with customers, suppliers, etc. Previously, the cost of the patterns and tooling was expensed in the year of acquisition.

What would the allowance have been if the company maintained the ratio at the level? Why do you think the management of Harnischfeger made these accounting changes? When the outside world compares our financial performance with that of corporagion companies, they may or may not take the time and effort to untangle the effects of the differences in financial policies that various companies follow. In fact, the company was negotiating long-term contracts in with the governments of Turkey and China.

Harnischfeger Corporation

Auth with social network: Halsey In this chapter, we will cover the four financial statements that are provided by companies to shareholders and other interested. If people adjust for the differences in accounting policies when they compare us with other companies, then it should not matter whether we follow conservative or liberal policies.


Grade was appointed as the president and chief operating officer COO. In accounting there is no such thing as absolute truth. But suppose they do not adjust. See Exhibit 4, Notes 6 and 9, in the case. This strategy is likely to help the company to move away from the mining and construction equipment business, which is a low-growth and cyclical industry, to a higher-growth and more stable business.

From one side that decision could help the company to rebuild the trust of customers and suppliers for continuing in business. However, the evidence presented in these studies is not conclusive. Describe these changes as clearly as you can. A limited time offer! If people adjust for the differences in accounting policies when they compare us with other companies, then it should not matter whether we follow conservative or liberal policies. Change in the fiscal year for some foreign subsidiaries.

This resulted in a change in sales calculation.

The company changed its accounting for duration patterns and tooling. The instructor should encourage this discussion. C Prentice Hall, Inc. The changes in the top management seem to be good.

Be as specific as possible. The reduction in benefits and wedges were significant from to The cumulative effect of change in there will be no reduction in the depreciation expense corporahion to change. Students point out a number of possible motives for the accounting changes: From the other side, the workers would suffer a significant economic lost and could lose the motivation to work for the company. Now we have decided to change this.