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Answer the case and provide an explanation to the case, ethical concerns and analysis. Ethical Dilemma You have recently been employed by a large retail
Answer the case and provide an explanation to the case, ethical concerns and analysis.
Ethical Dilemma You have recently been employed by a large retail chain that sells sporting goods. One of your tasks is to help prepare periodic financial reports for external distribution. The chain's largest creditor, Manila Savings Bank, requires quarterly financial reports, and you are currently working on the reports for the three-month period ended March 31, 2024. During the months of January and February, the company spent 3,500,000 on a hefty TV advertising and billboard campaign. The #3,500,000 included the costs of producing the commercials as well as TV time to air the commercials and advertising fee to display the printed ads. All the costs were charged to Advertising Expense. The company's chief financial officer (CFO) has asked you to prepare a March 31 adjustments to remove the costs from advertising expense and to set up an asset called Prepaid Advertising that will be expensed in April. The CFO explained that \"This advertising campaign has led to significant sales in February and March and | think it will continue to bring in customers through the month of April. By recording the ad costs as an asset, we can match the cost of advertising with the additional April sales. Besides, if we expense the advertising in January and February, we will show an operating loss on our statement of profit or loss for the quarter. The bank requires that we continue to show quarterly profits to maintain our loan in good standing.\" What would you do? (In answering the case, please see the rubric for assessment below.)Step by Step Solution
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