Keanu Caroli, corporate controller for MainStreet Inc., is trying to decide how to present "Property, plant, and equipment" in the balance sheet. He realizes that the statement of cash flows will show that the company made a significant investment in purchasing new equipment this year, but overall he knows the company's plant assets are rather old. He feels that he can disclose one figure titled "Property, plant, and equipment, net of depreciation," and the result will be a low figure. However, it will not disclose the age of the assets. If he chooses to show the cost less accumulated depreciation, the age of the assets will be apparent. He proposes the following:

Property, plant & equip., net of depr $10 million

rather than

Property, plant & equip. $50 million

Less: Accum. depr. 40 million

Net book value $10 million

Your Assignment: In your initial post, answer the following questions:

1. What are the ethical issues involved?

2. What should Caroli do?