A division manager has concerns about the commercial potential of a software product for which development costs are currently being capitalized as an asset rather than as an expense for internal reporting purposes. The manager's bonus is based in part on the division's profits. The manager argues that showing development expenditure as an asset is justified because the new product will generate profits but presents little evidence to support his argument. The last two products from this division have been unsuccessful. The Management Accountant disagrees but wants to avoid a difficult personal confrontation with the boss, the division manager.

Required

Based on the Management Accountant's Ethical Standards Explain how the accountant will go about resolving the matter at hand (8 marks)