Accounting

(i) Describe what is meant by the term ‘earnings management’.

(ii) Provide an example of earnings management that relates to accrual accounting.

(iii) In terms of depreciation of the non-current asset your business purchased in stage 1 of the business design project:

a. Provide an estimate of the useful life of the asset justifying your estimate;

b. Provide an estimate (and justification) of the residual (scrap) value of the non-current asset;

c. Describe the link between depreciation of non-current assets and earnings management.