Publication Type

Journal Article

Version

publishedVersion

Publication Date

5-1999

Abstract

The management of Worldwide Shipping Corp. Ltd. is confronted with a dilemma when a new international accounting standard on leases is introduced which contains a transitional provision allowing firms to defer implementation for a period of 4 years. Students are required to put themselves in the position of managers who have to weigh the adverse impact of early adoption of the new accounting standard against a responsibility for fair financial reporting. The case aims to provide students with a better understanding of the impact of off-balance sheet transactions on a firm's financial statements. The case requires students to examine implications of accounting choice on management compensation and debt-contracting costs, as well as the perplexing problem of recognition in financial statements versus footnote disclosures. The case provides students with a useful exercise in the mechanics of effecting a change in accounting method using the retroactive method.

Keywords

Shipping industry, Financial statements, Business enterprises, Case studies

Discipline

Accounting | Corporate Finance

Research Areas

Corporate Governance, Auditing and Risk Management

Publication

Issues in Accounting Education

Volume

14

Issue

2

First Page

211

Last Page

231

ISSN

0739-3172

Identifier

10.2308/iace.1999.14.2.211

Publisher

American Accounting Association

Additional URL

https://doi.org/10.2308/iace.1999.14.2.211

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