Question
Ethics and Inventory An electronics store has a large number of computers that use outdated technology in its inventory. These computers are reported at their
Ethics and Inventory
An electronics store has a large number of computers that use outdated technology in its inventory. These computers are reported at their cost. Shortly after the December 31 year end, the store manager insists that the computers can be sold for well over their cost. But the stores accountant has been told by the sales staff that it will be difficult to sell these computers for more than half of their inventory cost.
Required:
Why is the store manager reluctant to admit that these computers have little sales value?
What are the consequences for the business of failing to recognize the decline value?
What are the consequences for the accountant of participating in a misrepresentation of the inventorys value?
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