Upon reading the notes to the financial statements of KAR Ltd.,you notice that the policies they have chosen tend to be deferring and amortizing both revenue and expenses.This approach leads you to believe that KAR Ltd.is employing a(n):

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Quizplus · Accepted Answer

Deferring and amortizing both revenue and expenses is a smoothing strategy, which aims to even out fluctuations in earnings over time by spreading out the recognition of revenue and expenses. This is done to avoid reporting periods with large fluctuations in earnings, which can negatively affect investor perception and stock prices. This strategy is not necessarily focused on maximizing profits or minimizing taxes, but rather on presenting a more stable and predictable earnings trend.

Upon Reading the Notes to the Financial Statements of KAR