Ethics assessment for ACCT 204

M. K. Gallant is president of Kranbrack Corporation. A company whose stock is traded on a national exchange. In a meeting with investment analysts at the beginning of the year, Gallant had predicted that the company's earnings would grow by 20% this year. Unfortunately, sales have been less than expected for the year, and Gallant concluded within two weeks of the end of the fiscal year that it would be impossible to report an increase in earnings as large as predicted unless some drastic action was taken. Accordingly, Gallant has ordered that wherever possible, expenditures should be postponed to the new year-including cancelling or postponing orders with suppliers, delaying planned maintenance and training, and cutting back on end-of-year advertising and travel. Additionally, Gallant ordered the company's controller to carefully scrutinize all costs that are currently classified as period costs and reclassify as many as possible as product costs. The company is expected to have substantial inventory at the end of the year.

Please answer the following questions:

1. Identify the potentialimpact on financial statements

2. Identifythe relevant stakeholdersofa situation.

Who are the relevant stakeholders (personsor groups with alegitimate interest)inthis situation?

3. What are some potential courses of action that the controller could take in this situation?

4. What are some potential consequences for each of these courses of action?

5. Do you think the companies conduct is ethical? Explain your response.

Describethe issues,ifany, which may potentially violate ethicalprinciples