Horizon Corporation manufactures personal computers. The company began operation in 2013 and reported profits for the years 2015 through 2018. Due primarily to increased competition and price slashing in the industry, 2019's income statement reported a loss of $20 million. Just before the end of the 2020 fiscal year, a memo from the company's chief financial officer to Jim Fielding, the company controller, included the following comments:

"If we don't do something about the large amount of unsold computers already manufactured, our auditors will require us to write them off. The resulting loss for 2020 will cause a violation of our debt covenants and force the company into bankruptcy. I suggest that you ship half of our inventory to J.B. Sales Inc., in Oklahoma City. I know the company's president and he will accept the merchandise and acknowledge the shipment as a purchase. We can record the sale in 2018 which will boost profits to an acceptable level. Then J.B. Sales will simply return the merchandise in 2019 after the financial statements have been issued.

Comment on the appropriateness of the suggestion made by the controller to fulfill financial reporting objectives, Consider relevant ethical issues in your response. A basic framework to address ethical decision-making is provided:

Ethics Discussion in Accounting:

There are many frameworks for the analysis of ethical dilemmas in Accounting. The basic steps include:

1. Identify the facts--who, what, where, when, and how.

2. Identify the ethical issue and the stakeholders such as shareholders, creditors, management, employees, potential investors, and the community.

3. Identify the values relevant to the situation such as confidentiality verses the right to know.

4. Specify the alternative courses of action.

5. Identify a course of action and the consequences of that action.¹

^{1. Adapted from Harold Q. Langenderfer and Joanne W. Rockness, "Integrating Ethics into the Accounting Curriculum:Issues, Problems, and Solutions," Issues in Accounting Education (Spring 1989)}