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Essay / Research Paper Abstract
This 4-page paper is a discussion about the accounting practices of Adelphia Communications, the cable company that filed Chapter 11 reorganization during 2002. Topics discussed include practices then and now. Bibliography lists 4 sources.
Page Count:
4 pages (~225 words per page)
File: D0_MTadeacc.rtf
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Unformatted sample text from the term paper:
a long line of accounting scandals that had been launched by WorldCom in 2001. Investigations of the companys accounting practices -- which included fraudulent company-guaranteed loans to the Rigases family
-- ended up putting the company in bankruptcy, as well as forcing the resignation of Adelphias founder and chairman John Rigases and sons Timothy (the CFO) and Michael (VP of
Operations) (Smith, 2004). In resigning, the Rigases family was forced to give up control of the company and return assets to Adelphia
in order to reduce the amount that the family needed to pay back to the company (Smith, 2004). Following that, in June 2002, the company filed for bankruptcy protection (Smith,
2004). As of now, much of the accounting activity is geared toward providing transparency to the SEC, as well as to try to push Adelphia away from bankruptcy and back
into full operation. What, exactly were the accounting practices that brought Adelphia so much trouble? One such practice involved inflating revenue and
cash flow during the early 2000s in a couple of ways (Scanlon, 2002). First, subscriber count was vastly inflated, which ended up having an impact ultimately on revenue and cash
flow (Scanlon, 2002). Later on in this paper, well discuss exactly how the Rigases family was able to inflate the subscriber account.
In another instance, in its 2000 annual report, Adelphia listed 216 subsidiaries which were actually holding companies, limited partnerships and limited liability companies, but revenues from these were counted as
overall revenues for Adelphia itself (Scanlon, 2002). This also ended up providing a false picture of revenue and cash flow to Adelphia investors.
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