Reference no: EM131219200
ETHICS CASE
At one time, Boeing closed a giant deal to acquire another manufacture; McDonnell Douglas. Boeing paid for the acquisition by issuing shares of its own stock to the stockholders? of McDonnell Douglas. In order for the deal not to be revoked, the value of Boeing’s stock could not decline below a certain level for a number of months after the deal.
During the first half of the year, Boeing suffered significant cost overruns because of inefficiencies in its production methods. Had these problems been disclosed in the quarterly financial statements during the first and second quarters of the year, The company’s stock most likely would have plummeted, and the deal would have been revoked. Company managers spent considerable time debating when the bad news should be disclosed. One public relations manager suggested that the company’s problems be revealed on the date of either Princess Diana’s or Mother Teresa's funeral, in the hope that it would be lost among those big stories that day. Instead, the company waited until October 22 of that year to announce a $2.6 billion write-off due to cost overruns. Within one week, the company’'? Stock price had fallen 20%, but by this time the McDonnell Douglas deal could not be reversed.
Who are the stakeholders in this situation?
What are the ethical issues?
What assumptions or principles of accounting are relevant to this case?
Do you think it was ethical to try to “time” the release of a story so as to diminish its effect?
What would you have done if you were the chief executive officer of Boeing?
Boeing’s top management maintains that it did not have an obligation to reveal its problems during the first half of the year. What implications does this have for investors and analysts who follow Boeing’s stock?
|
Accounting equation and record the beginning account balance
: As of December 31, 2014, Post Company had total cash of $153,000, notes payable of $85,300, and common stock of $52,100. During 2015, Post earned $33,000 of cash revenue, paid $18,500 for cash expenses, and paid a $2,700 cash dividend to the stockhol..
|
|
Determine the amount of retained earnings
: As of December 31, 2014, Post Company had total cash of $153,000, notes payable of $85,300, and common stock of $52,100. During 2015, Post earned $33,000 of cash revenue, paid $18,500 for cash expenses, and paid a $2,700 cash dividend to the stockhol..
|
|
Compute diluted earnings per share
: On January 1, 2014, Crocker Company issued 10-year, $3,841,000 face value, 6% bonds, at par. Each $1,000 bond is convertible into 18 shares of Crocker common stock. Crocker’s net income in 2014 was $257,000, and its tax rate was 40%. Compute diluted ..
|
|
Compute the weighted-average number of shares outstanding
: Tomba Corporation had 582,000 shares of common stock outstanding on January 1, 2014. On May 1, Tomba issued 45,600 shares. Compute the weighted-average number of shares outstanding if the 45,600 shares were issued for cash. Compute the weighted-avera..
|
|
What assumptions or principles of accounting are relevant
: At one time, Boeing closed a giant deal to acquire another manufacture; McDonnell Douglas. Boeing paid for the acquisition by issuing shares of its own stock to the stockholders? of McDonnell Douglas. Who are the stakeholders in this situation? What ..
|
|
Find interesting or out of the ordinary
: Describe any management concerns listed and/or explain anything you find interesting or out of the ordinary. Describe any projections and/or future expectations of the management.
|
|
What does full disclosure mean
: What does full disclosure mean? How does full disclosure affect financial reporting? Are there any ethical implications to what must be reported in order to comply with full disclosure? Explain. What recommendations would you make to management regar..
|
|
What information is contained in the balance sheet
: What information is contained in the balance sheet? What are limitations of the balance sheet? How can balance sheet limitations be overcome? What are the limitations of using ratios for financial statement analysis? What are the benefits? Do differe..
|
|
Operating expenses are projected to be fixed annual amount
: Jordan and Taylor became friends after meeting on a reality cooking show. They have recently decided to start an Internet business to sell their delicious chocolate brownies. Operating expenses are projected to be a fixed annual amount of $80,000. If..
|