Ender Corporation Case 11
MINICASE ACCT – 13
1. What are the relevant facts?
- The company for which Chris is the controller is facing difficult times in light of a downturn in the construction industry.
- Chris and Robin know that a material receivable from the Ender Corporation is probably uncollectable.
- The allowance adjustment for the material receivable has not been made
- Allowance adjustment will cause the auditor to mention the company’s unstable financial position and therefore without a clear opinion, the bank will probably refuse the loans they applied in order for the company to continue in existence.
2. Who are the primary stakeholders?
- Chris, the controller for a small construction company believes that allowance for the Ender receivable should …show more content…
Identify the ethical issue associated with each of the relevant facts and rank or comment on its severity. Include the different perspectives of: utilitarianism, rights and justice.
5. What are the ethical issues? What are the possible alternatives?
Ethical issue
- Dawn must have personal integrity and responsibility to the company and its stakeholders to correct the accounting error from the prior year instead of hiding its subsequent resolution from the company management
- The company must decide whether the omission made by Dawn create an incentive to rehire the people who had been laid off
Possible alternatives
- Dawn can accept Bill’s suggestion to correct the material adjustment which will lead to the layoffs of the workers
- Dawn can think about Bill’s strategy but refuse his invitation for dinner
- Dawn can bring the omission to the management’s attention to decide what actions can or should be carried out
- Dawn can threaten Bill not to report her mistakes to the management
- Dawn can do nothing with the accounting error. Thus, the error will continue and the income for Minter Metroplex continues to …show more content…
What are the relevant facts?
- All leased real estate from Apel manufacturing is reported as an operating lease.
- In Jon’s opinion, the building lease should be treated as a capital lease from the review of statement of Financial Accounting Standards No.13
- When the lease is a capital lease, the lease should be shown in the financial statements
- Rex, the CEO of the company does not want the lease liability to be reflected on the balance sheet as increasing in the liabilities will jeopardize the bank loan application.
2. Who are the primary stakeholders?
- Jon, Apex’s controller who acts professional responsibility to be integrity
- Rex, the CEO who does not want the lease liability to be shown on the balance sheet
- Apel’s shareholders are small numbers of people who do not rely on financial accounts
- Employees of Apel manufacturing
- The creditors
3. Are the accounting rules clear on the appropriate accounting treatment for this type of issue? Discuss.
- If the creditor requires audited financial statements, the failure to record a capital lease may result in a qualified audit opinion
4. Identify the ethical issue associated with each of the relevant facts and rank or comment on its severity. Include the different perspectives of: utilitarianism, rights and
1. What are the relevant facts?
- The company for which Chris is the controller is facing difficult times in light of a downturn in the construction industry.
- Chris and Robin know that a material receivable from the Ender Corporation is probably uncollectable.
- The allowance adjustment for the material receivable has not been made
- Allowance adjustment will cause the auditor to mention the company’s unstable financial position and therefore without a clear opinion, the bank will probably refuse the loans they applied in order for the company to continue in existence.
2. Who are the primary stakeholders?
- Chris, the controller for a small construction company believes that allowance for the Ender receivable should …show more content…
Identify the ethical issue associated with each of the relevant facts and rank or comment on its severity. Include the different perspectives of: utilitarianism, rights and justice.
5. What are the ethical issues? What are the possible alternatives?
Ethical issue
- Dawn must have personal integrity and responsibility to the company and its stakeholders to correct the accounting error from the prior year instead of hiding its subsequent resolution from the company management
- The company must decide whether the omission made by Dawn create an incentive to rehire the people who had been laid off
Possible alternatives
- Dawn can accept Bill’s suggestion to correct the material adjustment which will lead to the layoffs of the workers
- Dawn can think about Bill’s strategy but refuse his invitation for dinner
- Dawn can bring the omission to the management’s attention to decide what actions can or should be carried out
- Dawn can threaten Bill not to report her mistakes to the management
- Dawn can do nothing with the accounting error. Thus, the error will continue and the income for Minter Metroplex continues to …show more content…
What are the relevant facts?
- All leased real estate from Apel manufacturing is reported as an operating lease.
- In Jon’s opinion, the building lease should be treated as a capital lease from the review of statement of Financial Accounting Standards No.13
- When the lease is a capital lease, the lease should be shown in the financial statements
- Rex, the CEO of the company does not want the lease liability to be reflected on the balance sheet as increasing in the liabilities will jeopardize the bank loan application.
2. Who are the primary stakeholders?
- Jon, Apex’s controller who acts professional responsibility to be integrity
- Rex, the CEO who does not want the lease liability to be shown on the balance sheet
- Apel’s shareholders are small numbers of people who do not rely on financial accounts
- Employees of Apel manufacturing
- The creditors
3. Are the accounting rules clear on the appropriate accounting treatment for this type of issue? Discuss.
- If the creditor requires audited financial statements, the failure to record a capital lease may result in a qualified audit opinion
4. Identify the ethical issue associated with each of the relevant facts and rank or comment on its severity. Include the different perspectives of: utilitarianism, rights and