What ethical issue if any underlies the given case
Course:- Accounting Basics
Reference No.:- EM13903485

Assignment Help
Assignment Help >> Accounting Basics

Ethical Dilemma

The West Bay Company, owned and operated by Mohammad Salim, manufactures and sells different types of long life dairy products. The company has reported profits in the majority of years since the company's inception in 1972 and is projecting a profit in 2015 of $65000 down from $96000 in 2014.

Near the end of 2015, the company is in the process of applying for a bank loan. The loan proceeds will be used to replace manufacturing equipment necessary to modernize the manufacturing operation. In preparing the financial statements for the year, the chief accountant, Saleh Saeed , mentioned to Mohammad Salim that approximately $40000 of diary inventory near to be expired and should be written off as a loss in 2016. Mohammad is worried that the write-down would lower 2015 income to a level that might cause the bank to refuse the loan. Without the loan, it would be difficult for the company to compete. This could cause decreased future business and employees might have to be laid off. Mohammad is considering waiting until 2016 to write down the inventory. Saleh Saeed is contemplating his responsibilities in this situation?


Answer the following questions.

1. What ethical issue, if any, underlies the above case?

2. If there is ethical issue, which part will be affected by?

3. What alternatives should be considered?

4. Assess the consequences of the alternatives.

5. What decision would you recommend?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
Describe and illustrate three sustainability challenges within a supply chain. What is meant by service and services operations within the context of a service-based supply ch
Evaluate what a cumulative loss in the retained earnings section of a company's balance sheet might indicate about the financial performance in the future, indicating how th
Explains the required reporting for defined contribution, defined benefit, and other postretirement plans. Also include an explanation of what must happen in order for the t
Assume that Clarke owns 100 percent of Rogers's voting stock and is filing a consolidated tax return. What income tax amount does this affiliated group pay for the current p
What is Justin’s adjusted tax basis for his partnership interest immediately after partnership is formed? What is the partnership’s adjusted basis for property contributed by
Evaluate what changes should be made to both the Sarbanes-Oxley Act of 2002 and other current laws in order to make them more effective in deterring companies from committin
Recent academic studies in financial economics conclude that stockholders of target firms in takeover bids "win" (earn abnormal returns) and that stockholders of successful
The following accounts appear on Nordstrom's 2011 financial statements as reported in its Form 10-K for the fiscal year ended January 28, 2012. The accounts are listed in al