Corning Case Accounting Analysis Accounting Assignment

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Corning Case Accounting Analysis
The business reality of any given organization is determined by the accounting information, management information and the market share (Gennaioli, Nicola, Andrei, and Robert 2015). In the case of Corning, the accounting information as revealed in the annual financial report shows that the company has executed the plan of allocating an approximation of more than $12.5 billion to their shareholders and achieved a return of around $6billion. Also, several information regarding the sales done in 2016 reveal an increase and this means that the organization is making substantial profits. A good example is the sales in Optical Communications during the fourth-quarter of 2016 rose to 11% from 2015.
However, some accounting distortions have been made on key performance metrics and other items of the organization. The metrics are recorded using non-GAAP rules to avoid the impact associated with exchange rates of the Korean Won and the Japanese yen. As a result, this reflects extra profits for the organization from an international view. The distortion is made for the purpose of portraying a good image for the company to local investors. Hence, the underlying reality of the business is that it’s not growing as much as the accountings reveal. The impact of this distortion on the sustainability of profits is that it promotes growth by attracting buyers and investors in the long run (Doukakis, Leonidas and Georgios Papanastasopoulos 2014).
The fact that R&D is expensed when incurred might make it difficult to forecast metrics such as the expected profits because it’s not easy to forecast the amount that will be spend on research and development. Therefore, one will not determine the amount of expense to deduct on the forecasted earnings because the R&D amounts in included in the financial statements after it has been determi...