Technical adjustments are made to company financial statements to improve earnings, usually to make the company appear more financially healthy and profitable to investors, shareholders or regulators. Here are some common methods, but be aware that they can cause compliance and ethical issues and are illegal in some cases: 1. **Revenue recognition adjustments**: - **Advance revenue recognition**: Revenue that should have been recognized in a future period is recognized in advance to increase current period revenue. - **Defer cost recognition**: Costs that should have been recognized in the current period are postponed to future periods to increase current profits. 2. **Asset impairment adjustments**: - **Defer asset impairment**: If the value of an asset decreases, it should be impaired. Deferring impairment can temporarily increase book profits. 3. **Expense capitalization**: - **Capitalized operating expenses**: Certain operating expenses are capitalized and recorded as assets instead of expenses, thereby reducing expenses in the current period and improving profits. 4. **Inventory valuation method adjustments**: - **Change inventory valuation method**: Use a different inventory valuation method (such as LIFO or FIFO) to affect inventory costs and profitability. 5. **Debt restructuring**: - **Debt extension**: Delaying the maturity of debt or restructuring debt with better terms to reduce current interest expenses. 6. **Non-recurring profit and loss adjustment**: - **One-time gains**: Include non-recurring gains from the sale of assets or restructuring to increase current profits. - **Hidden or reclassified losses**: Reclassify certain losses as non-recurring items to reduce the impact on recurring profits. 7. **Related-party transactions**: - **Manipulating related-party transaction prices**: Adjusting profits through transactions with related parties, such as reducing related-party expenses by artificially increasing sales revenue. These adjustment methods need to be used with caution, because if they exceed the scope permitted by regulations, they may lead to legal consequences, including re-auditing of financial statements, fines, and even criminal charges. In addition, these practices may damage the long-term integrity and reputation of the company. Compliance and transparency should always be the principles of corporate financial processing.