Here is the synopsis of our sample research paper on CORPORATIONS, WRITE-DOWNS AND THE SEC. Have the paper e-mailed to you 24/7/365.
Essay / Research Paper Abstract
This 3-page paper explains why the SEC can't become involved with certain corporate write-downs. Bibliography lists 1 source.
Page Count:
3 pages (~225 words per page)
File: D0_MTcorpwrit.rtf
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Unformatted sample text from the term paper:
As an example from this article, though Nortel generated some $650 million in inventory parts, it revalued some of its parts to $0. Companies are required to report whether they
write off the cost value (or book value) of inventory even if they dont dispose of it. Later on, if they sell the inventory, they arent required to report the
sale for cash of what was once considered "worthless" inventory. The problem here is that, when inventory is sold (after the write-down), it could lead to inflated profits. The article
also noted that JDS Uniphase said it would write off $250 million of its inventory - but would disclose any results from future sales. Micron Technology, which wrote down $260
million, wont disclose any future sale. Should the SEC get involved with any of this? While all of this might seem very unethical, unfortunately, there isnt much the SEC
can really do in this situation. The SEC is charged with finding fraud and rooting it out. The problem with these write-downs, and they way theyre handled, is that they
arent exactly fraudulent. Rather, what the company is doing, is writing down the perceived value of the inventory (based on fair-market value at the time). The company can honestly claim,
based on a mark-to-market approach, that inventory is worth (or not) a certain amount. Whos to say that it might be worth more (or less?) at a future date? Again,
this isnt fraud so much as it involves a little bit of clever manipulation, aided by the Financial Accounting Services Board (FASB) which needs to change the inventory write-down parameters.
For example, inventory write-down should be more specific - theres nothing wrong with a mark-to-market approach (after all, the company needs to have some benchmark against which to measure
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