Jeremy Copeland paid $50.000 for a franchise that entitled him to market Success Associates software programs in the countries of the European Common Market. Copeland intended to sell individual franchises for the major language groups of western Europe-German, French. English. Spanish, and Italian. Naturally, investors considering buying a franchise from Copeland asked to see the financial statements of his business. Believing the value of the franchise to be greater than $50,000. Copeland sought to cap- italize his own franchise at $500.000. The law firm of St. Charles & LaDue helped Copeland form a corporation chartered to issue 500.000 shares of common stock with par value of $1 per share. Attorneys suggested the following chain of transactions:

a. A third party borrows $500,000 and purchases the franchise from Copeland.

b. Copeland pays the corporation $500,000 to acquire all its stock.

c. The corporation buys the franchise from the third party, who repays the loan. In the final analysis, the third party is debt-free and out of the picture. Copeland owns all the corporation's stock, and the corporation owns the franchise. The corporation's balance sheet lists a franchise acquired at a cost of $500.000. This balance sheet is Copeland's most valuable marketing tool. Required 1. What is unethical about this situation? 2. Who can be harmed? How can they be harmed? What role does accounting play?