Gail Easy, the Controller of Tech-It-Up, just left a meeting with Bob Devious, the CFO of the company. Easy told Devious that because the inventory was slow-moving, it should be written down by $100,000. Devious told Easy not to record her proposed $100,000 write-down of inventory because it would reduce the current ratio below debt covenant requirements on a $1 million loan to Pay-Up-Now Bank & Trust. Moreover, the company anticipates a new public offering of stock next year and Devious wants the earnings to be as high as possible.

What would you do if you were in Gails position? Why?