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Marina Berhad is a subsidiary of Seamaster Berhad. The financial controller believes that yearly allowance of doubtful accounts for Marina Berhad should be 7% of
Marina Berhad is a subsidiary of Seamaster Berhad. The financial controller believes that yearly allowance of doubtful accounts for Marina Berhad should be 7% of gross accounts receivable. The president, nervous that the parent company might expect the subsidiary to sustain its 9% growth rate, suggests that the financial controller increase the allowance for doubtful accounts to 8% yearly. The president thinks that the lower net income, which reflects a 5% growth rate, will be a more sustainable rate for Marina Berhad, Required: (1) Should the financial controller be concerned with Marina Berhadis growth rate in estimating the allowance of doubtful accounts? Explain your answer. Does the president's request pose an ethical dilemma for the financial controller? Give your reasons
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