Question
KC Corporation manufactures personal computers. The Company began operations in 2016 and reported profits for the years 2016 through 2019. Due primarily to increased competition
KC Corporation manufactures personal computers. The Company began operations in 2016 and reported profits for the years 2016 through 2019. Due primarily to increased competition and price slashing in the industry, 2020's income statement reported a loss of $20 million. The day before the end of the 2021 fiscal year, a memo from the company's CFO to James Fields, the company controller, included the following comments: If we don't do something about a large amount of unsold computers already manufactured, our auditors will require us to write them off. The resulting loss for 2021 will cause a violation of our debt covenants and force the company into bankruptcy. I suggest that you ship half of our inventory to A.B. Sales, Inc. in Chicago, IL. 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 2021, which will boost profits to an acceptable level. Then A.B. Sales will simply return the merchandise in 2022 after the financial statements have been issued. 1) Identify the ethical issue and the stakeholders. Stakeholders may include shareholders, creditors, management, employees, and the community. 2) Specify the alternative courses of action. Your alternative courses of action do not include doing something else with the computers - like sell them, discount them, give them away. That is because a) there is no time and b) your boss has told you to do something and he is expecting you to do it. So that being said, What are you going to do? 3) Identify the consequences of each possible course of action. 4) Make your decision as to what would you do.
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