please let me know if I answered these questions correctly and explain why Iâm correct. And if Iâm wrong please tell me how to improve my answers. Thank you
Fresh Air Anti-Pollution Company is suffering declining sales of its principal product, no biodegradable plastic cartons. The president, Tyler Weber, instructs his controller, Robin Cain, to lengthen asset lives to reduce depreciation expense. A processing line of automated plastic extruding equipment, purchased for $3.5 million in January 2014, was originally estimated to have a useful life of 8 years and a salvage value of $400,000. Depreciation has been recorded for 2 years on that basis. Tyler wants the estimated life changed to 12 years total and the straight-line method continued. Robin is hesitant to make the change, believing it is unethical to increase net income in this manner. Tyler says, âHey, the life is only an estimate, and Iâve heard that our competition uses a 12-year life on their production equipment.â
Who are the stakeholders in this situation?
The stakeholders in this situation are the president, Tyler, and the controller, Robin as well as the company as a whole.
Is the proposed change in asset life unethical, or is it simply a good business practice by an astute president?
b) I think that the proposed change in asset life is unethical. Robin is clearly hesitant to change the numbers because she knows it is wrong. Tyler's reasoning behind it is not really valid. He only states that it is an estimate and that other companies do it. Further, this does not solve the real problem that the company has. It does not correct the fact that sales are declining. Rather than focus his attention on making stuff up, Tyler should really be focused on how to improve sales. It is never ethical to change the numbers just to make the company look better.
please let me know if I answered these questions correctly and explain why Iâm correct. And if Iâm wrong please tell me how to improve my answers. Thank you
Fresh Air Anti-Pollution Company is suffering declining sales of its principal product, no biodegradable plastic cartons. The president, Tyler Weber, instructs his controller, Robin Cain, to lengthen asset lives to reduce depreciation expense. A processing line of automated plastic extruding equipment, purchased for $3.5 million in January 2014, was originally estimated to have a useful life of 8 years and a salvage value of $400,000. Depreciation has been recorded for 2 years on that basis. Tyler wants the estimated life changed to 12 years total and the straight-line method continued. Robin is hesitant to make the change, believing it is unethical to increase net income in this manner. Tyler says, âHey, the life is only an estimate, and Iâve heard that our competition uses a 12-year life on their production equipment.â
Who are the stakeholders in this situation?
The stakeholders in this situation are the president, Tyler, and the controller, Robin as well as the company as a whole.
Is the proposed change in asset life unethical, or is it simply a good business practice by an astute president?
b) I think that the proposed change in asset life is unethical. Robin is clearly hesitant to change the numbers because she knows it is wrong. Tyler's reasoning behind it is not really valid. He only states that it is an estimate and that other companies do it. Further, this does not solve the real problem that the company has. It does not correct the fact that sales are declining. Rather than focus his attention on making stuff up, Tyler should really be focused on how to improve sales. It is never ethical to change the numbers just to make the company look better.
