Henrietta Aguirre, the ethical accountant, is the newly hired Director of Corporate Taxation for Mesa Incorporated, which is a publicly traded corporation. Aguirre's first job with Mesa was to review the company's accounting practices for deferredtaxes. In doing her review, she noted differences between taxand book depreciation methods that permitted Mesa to recognize a sizable deferred tax liability on its balance sheet. As aresult, Mesa did not have to report current tax expenses.

Aguirre also discovered that Mesa had an explicitpolicy of selling off plant and equipment assets beforethey reversed in the Deferred Tax Liability account.This policy, together with the rapid expansion of Mesa'scapital asset base, allowed Mesa to defer all incometaxes payable for several years, at the same time as itreported positive earnings and increasing earnings per share.Aguirre checked with the legal department and found the policyto be legal, but she is uncomfortable with the ethics of it.

Instructions
(a) Why would Mesa have an explicit policy of selling assetsbefore they reversed in the Deferred Tax Liability account?
(b) What are some of the ethical implications that arise fromMesa's aggressive deferral of income taxes?
(c) Who could be harmed by Mesa's ability to defer incometaxes payable for several years, despite positive earnings?
(d) In a situation such as this, what might be Aguirre's professional responsibilities as an ethical accountant?