Managerial Accounting (Research Paper Sample)

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Managerial Accounting
This is an article that appeared in the Wall Street Journal on 18th January, 2013. It is about accounting misconduct that exaggerated profits at a certain mining equipment business in China as discovered by Caterpillar Inc. after its purchase of the company the previous year.
Apparently, the accounting faculty at the company is premeditated and coordinated by many managers for another company which was paid in so much as $734 million the previous June. This discovery of the accounting scheme will consequently lead to a non-cash charge of estimated value of $580 million, or alternatively, 87 cents per share.
According to Caterpillar, it initially noted the inconsistencies between the inventories in Siwei's records and its own, after the acquisition. It instantly instigated an investigation that unearthed discrepancies in costs allocations in play for years, which allowed for profits to be inflated. Additionally, they discovered through the investigation that there were faulty revenue practices that in turn boosted sales.
Action was immediately taken by Caterpillar, first by sweeping off the majority senior managers who worked at Siwei and replacing them with another executive team. The tasks for Siwei manufacturing activities have been transferred to Caterpillar's China operations branch. This is led by the Vice President, Qinau Chen. The sales and support group will be accountable to Kebao Yang, the global mining manager for both China and Korea. Caterpillar Chief Executive Douglas Oberhelman stated (2013), "The actions carried out by these individuals are offensive and completely unacceptable. This conduct does not represent, in any way, shape or form, the way Caterpillar does business or how we expect our employees to work, which is spel...