Bedrock Corporation purchased an office building in an up-and-coming location where land values are quickly appreciating. Jimmy Ford, controller, and Barbara Patel, financial vice president, are trying to allocate the cost of the purchase between the land account and the building account. Noting that depreciation can be taken only on the building, Ford favors placing a very high proportion of the cost on the building itself, thus reducing taxable income and income taxes. Patel, his supervisor, argues that the allocation should recognize the increasing value of the land, regardless of the depreciation potential of the warehouse. Besides, she says net income is negatively impacted by additional depreciation and will cause the companys stock price to go down.

Please answer the following questions:

1. What stakeholder interests are in conflict?

2. What ethical issues does Ford face?

3. How should these costs be allocated?