Aston Projected Income Statement

YE 12/31/2014 Sales 29,000,000 COGS $14,000,000 Depreciation expense 2,600,000 Operating Expense 6,400,000 23,000,000 Income Before Tax 6,000,000 Tax Expense 3,000,000 Income After Taxes 3,000,000 ASTON CORPORATION SELECTED BALANCE SHEET INFORMATION AT DECEMBER 31, 2012

Estimated cash balance $5,000,000 Available-for-sale securities (at cost) 10,000,000 Fair value adjustment (1/1/12) 200,000 Estimated Fair Value at December 31st 2014

Security Cost Estimated Market A 2,000,000 2,200,000 B 4,000,000 3,900,000 C 3,000,000 3,100,000 D 1,000,000 1,800,000 Total 10,000,000 11,000,000 Other Info As of December 31st 2014

Equiptment- $3,000,000

Accumulated Depreciation (5-Year SL)- 1,200,000

New Robotic Equiptment (Purchased 1/1/14)- 5,000,000

Accumulated Depreciation (5-year DDB)- 2,000,000

The corporation has never used robotic equipment before, and Warren assumed an accelerated method because of the rapidly changing technology in robotic equipment. The company normally uses straight-line depreciation for production equipment. Aston explains to Warren that it is important for the corporation to show a $7,000,000 income before taxes because Aston receives a $1,000,000 bonus if the income before taxes and bonus reaches $7,000,000. Aston also does not want the company to pay more than $3,000,000 in income taxes to the government.

Instructions: answer the following A and B.

A)What can Warren do within GAAP to accommodate the president's wishes to achieve $7,000,000 in income before taxes and bonus? Present the revised income statement based on your decision.

B)2) are the actions ethical and who are the stake holders in this decision?