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Evaluation of the assumptions made and estimates used by the management to account for the issue

Only do requirement 2 and 3(a) in the case on page 5 and 6: 2. After you completed your analysis, John Hilary, the Chief Financial Officer, stopped by your office to discuss the earnings release. Preliminary and unreported basic earnings per share are $0.19 per share for 2008. However, Mr. Hilary indicated that the consensus analyst forecast for annual basic earnings per share is $0.20 per share. He mentioned that if the Company were to miss the consensus forecast, the share price would likely suffer and may inhibit future expansion plans of the Company. In addition, it is likely that annual bonuses will be reduced or eliminated. Mr. Hilary implied that your review of the preliminary financial statements should focus on ways to increase basic earnings per share. Identify and evaluate at least four (and no more than six) alternatives which together will enable Summer Technology to meet or beat the consensus estimate for annual basic earnings per share of $0.20. Your analysis should consider the following for each alternative: a. Your evaluation of the assumptions made and estimates used by the management to account for the issue b. Acceptability of existing accounting treatment and proposed alternative based upon the financial accounting standards that apply (Cite appropriate FASB Codification references) c. The specific numerical effect of the alternative on earnings per share (basic and diluted) d. Financial statement disclosure implications (i.e., the transparency of the alternative) 3. a. Following your discussion with Mr. Hilary, you felt that his request may have been inappropriate. Assess the ethical dilemma that you face in completing your review and recommendations for Requirement 2. What course of action would you pursue to resolve your ethical dilemma, if any?

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