can u define what is the egregious accounting,in the accounting case “Biovail”,can u identify the accounting...

can u define what is the egregious accounting,in the accounting case “Biovail”,can u identify the accounting of Biovail is egregious or aggressive?

Expert Solution

Accounts should be prepared as per GAAP, when these principles are not followed accounts are not correct.

But in cases where error has been committed with an intention to deceive the others this is called egregious accounting. And in case of Biovail Company this has happened as the books are prepared with an intention to deceive others and to show high profits for the period.

Biovali has used some intentionally wrong principles to recognize the revenue.

Generally revenue is recognized when the good are delivered to the customers but they have recognized the revenue at the time good left the warehouse.

This has caused huge accounting error as the shipmen t that they have shipped for around$20 Million had lost in an accident and since they have already recognized the revenue they have failed to report this cost as their loss and considered it as loss of the distributor to whom this is to be delivered and hence this has not impacted there P&L position

ekkarill92 answered 2 years ago

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