Concept explainers
Long term Assets:
Long term assets are assets that can be held for a longer period of time and cannot be easily converted to cash. They are also known as non-current assets. The long term asset includes the property, plant and equipment, long term investments and intangible assets.
To discuss: The primary method that Company W used to carry out the fraud.
Explanation of Solution
Company W uses the telecommunication lines of other company. Though company W paid for the service, the company has to record it as an operating expense under the income statement. But Company W purposely recorded it as a long term assets in its balance sheet. This fraudulent activity overstates the net income by 11 billion.
Thus, the primary method that Company W used to carry out the fraud is explained above.
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Chapter 7 Solutions
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