Cooperative Advertising Reserve : A Cooperative Advertisement Reserve Essay

906 Words Sep 14th, 2016 4 Pages
An excessive figure called the cooperative advertising reserve was literally recognized by Sunbeam in the year 1996. It was mainly established to fund a part or portion of its personal retailers’ costs by running the local promotions.Anderson was supposed to have identified the increase of the amount recorded known to 25% more than prior’s year accrual amount which turns out to be an amount of $21,800,000 dollars at least identified during the horizontal analysis of the financial statement especially during the analytical procedures.
Looking back at GAAP, we realize they’ve mentioned that matching principles are not required at all to make an estimate to all expenses incurred that are simply related to the revenues of that same period.So, in that case we need to know that the recording of the estimation of the cooperative advertising reserve would have been expected by the auditor ,but needs keep in mind that they need be capable of determining the recorded estimate of the accruals or related expenses to be a approximately close to the actual costs itself. By having the auditor fully understand the causal factors associated with that that expense, we can test the estimate recorded by Sunbeam. Also, by having the auditors understand the causal factor,they can be capable of determining whether those the estimates made were appropriate under GAAP or not.

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