Case 6. Assume you were recently hired as a staff accountant for Advanced Energy Solutions, Inc. You report to Tina, the director of financial reporting, who in turn reports to the CFO. One of your first assignments is to prepare the adjusting entries for the end of the second quarter and to draft the income statement. Tina instructs you to let her know as soon as you have the estimated earnings for the quarter. She says she will need to review the adjusting entries and earnings cal- culation with the CFO. After reviewing your work with the CFO, Tina tells you to change the entry that you recorded for depreciation expense on the company's fleet of trucks from $234,000 to $194,000. At first, you thought that you must have made some mistake in calculating the amount of depreciation, so you recheck your calculations. Surprisingly, you come up with the same amount again. So, tactfully, you ask Tina for an explanation for the change. She tells you that depreciation is only an estimate and that the CFO will change his mind about estimates based on earnings. Requirements 1. What is the effect of the change in the amount of the depreciation expense on the company's second-quarter earnings? 2. What is the ethical dilemma you face? 3. What alternatives might you consider, and what are the potential consequences of each alternative? 4. What are some of the common excuses used to rationalize unethical behavior? Case 8. You are the controller for Pro Clean Services, a company that provides janitorial services to large commercial customers. The company has been very successful during its first two years of operations, but to expand its customer base, the company is in need of additional capital to be used for equipment purchases. The two brothers who started the business, Adam and Tim Olson, invested their life savings in the business, so they have contacted a local bank about securing a loan for $175,000. The bank has asked for a set of financial statements, and Adam, being a businessperson, knows that the bank is going to be looking for a growth in earnings each year. Although the company's earnings have increased, Adam would like the past year to look better than it does now. Adam stops by your office late in the afternoon on December 31 to find out when the financial statements will be ready. You explain that you still have to close out the end of the year but should have them ready by the end of the week. Adam tells you he is aware of a major contract Tim is working on that it will be signed on January 3 and asks you to delay the closing process a few days so the new contract can be included in this year's operating results. You attempt to explain to Adam that you cannot do that, but you can tell he is not listening to you. Adam interrupts by saying, I don't know why you accountants get so worked up over a few days. Let me just say that it would be in your best interest to include this contract in the current year's operating results." Adam leaves your office in a hurry, and you hear him mutter under his breath as he turns the corner, That accountantwho does he think he is trying to tell me how to run my business?" Requirements 1. What are the accounting issues related to Adam's request? 2. What is the ethical issue involved in this case? 3. What would be the appropriate course of action for you to take