ABSTRACT
Recent accounting scandals have emphasized the need to think beyond debits and credits. Accounting students must understand the effects of transactions on a company's financial position, as well as the pressures and incentives they will someday face to misrepresent that position. This case introduces students in intermediate financial accounting courses to both of these important objectives. First, the case improves students' critical thinking skills in accounting by allowing them to determine if various correcting entries should be made, and what the effects of those transactions will be on the company's financial statements. Second, the case improves students' ability to evaluate ethical consequences by introducing them to conflicting incentives regarding those corrections: the obligation to provide investors with high-quality financial statements that fairly present the company's financial position versus the pressure to maintain a high stock price for investors. The case may be completed using either U.S. GAAP or IFRS.
