c95 Ethical Dilemma Making the ratios look good Talbot is the accounting manager
ID: 2798718 • Letter: C
Question
c95 Ethical Dilemma Making the ratios look good Talbot is the accounting manager for Kolla Waste Disposal Corporation. Ko nancial year since its inception. The company is expected to report a net loss. news, Ms. Talbot surprised the company president, Mir. Winston, by suggesting that the company write off approximately 25 percent of its garbage trucks. Mr. Winston responded by noting that the trucks could still be operated for another two or three years. Ms. Talbot replied, "We may use them for two or three more years, but you couldn't sell them on the street if you had to. Who wants to buy a bunch of old garbage trucks, and besides, it will make next vear's financials so sweet. No one will care about the additional write-off this year. We are already showing a loss. Who will care if we lose a little bit more?" lla is having its worst In the midst of such bad Required a. How will the write-off affect the following year's return on assets ratio? b. How will the write-off affecet the asset and income growth percentages? c. W ould writing off the garbage trucks violate any of the standards of ethical professional practice shown in Exhibit 4.4 of Chapter 4 d. Explain how the components of the fraud triangle relate to this case.Explanation / Answer
Solution-
a) If the trucks are written off the asset base would become smaller and as a result the return on asset (ROA) ratio would increase.
b) If the trucks are written off the base year amounts would become smaller and as a result the asset and income growth percentages would increase.
c) Action of Ms. Talbot is unethical . her behaviour and integrity is questionable as per the information given in the case. Everyone has to maintain a certain level of integrity while working and her behaviour is in violation of integrity standards to 1. Avoid conflicts of interest and advise all appropriate parties of any potential conflict. 2. Refrain from engazing in any activity that would prejudice their duties to carry out their duties etrhically.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.