ACTG 2011 Lecture Notes - Lecture 7: Earnout, Net Income, Financial Statement
Document Summary
Role: examine financial statements and advise them on how to proceed with negotiation. Union maximized ni (payout to employees, look after interest of the employees), accurate financial reporting. Management minimize ni (lower payout to union) Primary user = union (looking after their interest) Net income determines payout to employees. Terms and conditions of agreement: no major changes to accounting practices without permission with auditor, etc. Ifrs or aspe (recommend ifrs -> union might want more standardized, universal, if company goes public need ifrs or bank might require ifrs) *should have brief explanation of why it"s a constraint. Once it is justified that it can"t be sold, it follows irfs. If anything write down a portion of it (people will always need spare parts) *talk about accounting principle (address whether it follows ifrs) Note: this is a negotiation, try to put up a good case (once management agrees it"s a deal)
