$($Cost of Land vs$.$ Building Tones Company purchased a warehouse

in a downtown district where land values are rapidly increasing. Gerald Carter, controller, and Wilma

Ankara, financial vice president, are trying to allocate the cost of the purchase between the land and the building.

Noting that depreciation can be taken only on the building, Carter favors placing a very high proportion

of the cost on the warehouse itself, thus reducing taxable income and income taxes. Ankara, 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 company$$s stock price to go down.

Instructions

Answer the following questions.

a$.$ What stakeholder interests are in conflict?

b$.$ What ethical issues does Carter face?