Company X has a policy for firing employees that is based on the payment of unemployment taxes. The company knows that employers pay employment taxes on the first $7,000 of each employee's annual earnings only. So, if the company fires an employee who has already earned $7,000 and has to hire a new one, the company will end up paying employment taxes for one position twice during the year. Therefore, it delays the firing of employees until the start of a new year, and then hires a replacement.

1. Do you think it is ethical for the company to do this? Explain why or why not? (20 points)
2. Are there any other issues with this policy that the company must consider? (20 points)
3. Is it a good idea in your view to let accounting standards dictate policies? (20 points)