What ethical issues if any arise in this situation

Assignment Help Finance Basics
Reference no: EM13834643

Pringles Ltd is a large department store that has used the straight-line depreciation method since the company was first formed. For the year ended 30 June 2015, the company made a record profit and management expected these high profits to continue at least into 2016 and 2017, although economists were generally predicting an economic slowdown and a subsequent fall in profits in 2018 and 2019.

The general manager, Peter Pringle, approached the accountant, Marion Mason, and asked her if she could find a way to reduce the profit in the next couple of years and transfer it to 2018 and 2019 when things may not be going so well. 'This would give us consistent profits over the next few years and keep our shareholders happy,' said Peter.

Although Marion did not feel that Peter's reason for the change was justified, she was concerned that her contract with the company would not be renewed if she upset the general manager. After some consideration, Marion decided to change the depreciation method from the straight-line method to the sum-of-years'-digits method. Marion did not disclose this change in the notes to the financial statements as she felt that the reason given by Peter would not give a good impression.


A. Who are the stakeholders in this situation?

B. What ethical issues, if any, arise in this situation?

C. How does the change in accounting methods by Marion meet the objectives set out by Peter?

D. Do Marion's actions comply with the requirements of IAS 16/AASB 116?

E. Discuss the nature of depreciation in IAS 16/AASB 116. Outline alternative views considered for the accounting treatment of depreciation in the text book and discuss the rationale for the treatment adopted in the standard

Reference no: EM13834643

Difference between efficiency and effectiveness

Question 1: In a short essay, discuss the difference between efficiency and effectiveness Question 2: In a short essay, define planning and compare formal and informal plannin

International financing

A United State corporation requires borrowing $100 million for a period of seven years. It can issue dollar debt at seven percent or yen debt at 3 percent.

Web-oriented entertainment company

R.K. Maroon (RKM) is a seed-stage, Web-oriented entertainment company with important intellectual property. RKM's founders, all technology experts in the relevant area, are

When viewing terms special returns we know this can refer to

BBA3301-FIN 351: When viewing the terms "special returns" or "abnormal returns," we know this can refer to _____. Legal methods for attempting to profit through mergers and ac

What is the expected commission based on making calls

A stockbroker calls on potential clients from referrals. For each call, there is a 10% chance that the client will decide to invest with the firm. Fifty-five percent of thos

Working capital cash flow

Cool Water Inc. sells bottled water. The firm keeps in inventory plastic bottles at 12% of the monthly projected sales. These plastic bottles cost $0.005 each. The monthly s

What is jensens cost of preferred stock

Jensen's Travel Agency has 9 percent preferred stock outstanding that is currently selling for $30 a share. The market rate of return is 10 percent and the firm's tax rate i

Fisher effect-u.s and euro inflation and currency rates

Suppose that the U.S and Euro nominal interest rate are equal. Subsequently, the U.S. nominal rate decreases while Euro nominal interest rate remains stable.


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd