FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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(Change in Estimate) Mike Crane is an audit senior of a large public accounting firm who has just been assigned to the Frost Corporation’s annual audit engagement. Frost has been a client of Crane’s firm for many years. Frost is a fastgrowing business in the commercial construction industry. In reviewing the fixed asset ledger, Crane discovered a series of unusual accounting changes, in which the useful lives of assets,
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Answer the following questions.
(a) What are the ethical issues concerning Frost’s practice of changing the useful lives of fixed assets?
(b) Who could be harmed by Frost’s unusual accounting changes?
(c) What should Crane do in this situation?
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