(Issues Involving Standards Setting) When the FASB issues new standards, the implementation date is usually 12 months...
Question:
(Issues Involving Standards Setting) When the FASB issues new standards, the implementation date is usually 12 months from date of issuance, with early implementation encouraged. Paula Popovich, controller, discusses with her financial vice president the need for early implementation of a standard that would result in a fairer presentation of the company’s financial condition and earnings.
When the financial vice president determines that early implementation of the standard will adversely affect the reported net income for the year, he discourages Popovich from implementing the standard until it is required.
Instructions Answer the following questions.
(a) What, if any, is the ethical issue involved in this case?
(b) Is the financial vice president acting improperly or immorally?
(c) What does Popovich have to gain by advocacy of early implementation?
(d) Which stakeholders might be affected by the decision against early implementation?
Step by Step Answer:
Intermediate Accounting
ISBN: 9780471448969
11th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield