Managing Reported Expenses and Accruals Using Carryovers: Accounting Practices in Toshiba’s Visual Products Business

• In Event: Research with an Impact on Scholarship and Practice

Abstract

This case helps students to (a) apply the concept of accrual accounting in the context of expense recognition and (b) understand the financial statement effects of ‘self-reversing’ accruals. It also enhances their appreciation of the need to account for the substance of transactions rather than their mere legal form (or superficial compliance with accounting standards). Students perform critical FASB Codification research, evaluate Toshiba’s financial reporting of expenses and related liabilities, and determine whether or not Toshiba’s accounting represents a faithful depiction of its economic reality. The case can be used in intermediate accounting and professional accounting research courses. With minor modification to the requirements, it can also be used in a graduate financial accounting course. The case assignment improves students’ ability to think critically, work in groups, reach rational conclusions, and communicate convincingly.

Authors

• Mahendra R Gujarathi, Bentley University

• Amitabh Dugar, Bridgeway Capital Management