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    Cost of land versus building: Stakeholder interest, ethics

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    Consider the Concepts for Analysis problem CA10-7 on cost of land versus building (ethics) dealing with the Tones Company.

    Determine the stakeholder interests that are in conflict.
    Evaluate the impact of the each scenario.
    Propose an ethical recommendation that is in the best interest of the company. Justify your position.

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    Solution Preview

    Determine the stakeholder interests that are in conflict.

    The stakeholders include investors in company stock who would like to see the price per share increase in the market and an increase in the dividends paid to stockholders. Another group of stakeholders are lenders (bankers, creditors, bond holders) who want to see healthy net income reported on the financial statements of the company. A third group of stakeholders are the employees who may have stock options or own company stock through a deferred benefit plan. This group is interested in the rising price of the stock to exercise options, or employees with no options or company stock may prefer to see rising net income for bonus payments and increases in personal ...

    Solution Summary

    The 468 word cited solution explains the stakeholders interest using three types of stakeholders; The impacts of the allocation of costs between land and building is fully explained.