Mr. John Trizino, Novavaxs CFO, is happy with Novavaxs 6% stock price increase today. But he is concerned that the net income of the current calendar year may be lower than last year because of the heavy R&D cost to develop a COVID19 vaccine. This project will be complete around March 31, 2021. He is afraid that upper-level management might recommend cost reductions by laying-off his finance staff, including him.

Mr. Trizino knows that depreciation is a major expense for Novavax. The company currently uses the double-declining balance method for both financial and tax purposes. He is thinking of selling equipment purchased when Novavax developed SARSide, a SARS vaccine in 2004. The equipment has been infrequently used for testing several medical epidemic cures. The equipment has a carrying value of $20,000,000 and a fair value of $21,800,000. The gain on the sale of the equipment would be reported in the income statement. He doesnt want to highlight this method of increasing income. He is looking for the method that requires the least extensive disclosures (i.e., the least disclosure costs) and increases net income. It may be able to save Mr. Trizinos job and his staff members.

1. Who are the stakeholders (i.e., people affected by the decision) in this situation?

2. What specific methods are available for him?

3. Try to describe the methods specifically. Your articulation will be evaluated. Which one out of the available methods would you suggest? Is it ethical? Is it economical?