Ethical Decision Making: Property, Plant and Equipment
Not what you're looking for?
Andrea Pafko, corporate comptroller for Nicholson Industries, is trying to decide how to present "Property, plant and equipment" in the balance sheet. She realizes that the statement of cash flows will show that the company made a significant investment in purchasing new equipment this year, but overall she knows the company's plant assets are rather old. She feels that she can disclose one figure titled "property, plant, and equipment, net of depreciation," and the result will be a low figure. However, it will not disclose the age of the assets. If she coose to show the cost less accumulated depreciation, the age of the assets will be apparent. She proposes the following.
Property, plant and equipment, net of depreciation $10,000,000
rather than
Property, pant, and equipment $50,000,000
Less: Accumulated depreciation (40,000,000)
Net book value $10,000,000
Instructions:
a) What are the ethical issues involved?
b) What should Pafko do?
Purchase this Solution
Solution Summary
The solution discusses an ethical decision making process regarding "Property, plant and equipment."
Solution Preview
The ethical issue here is a lack of transparency. The comptroller is acting in a way that is intended to deceive, or hide something from investors. That being said, her treatment will do very little to hide ...
Purchase this Solution
Free BrainMass Quizzes
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.