Prophet Company signed a long-term purchase contract to buy timber from the U.S. Forest Service at

$300 per thousand board feet. Under these terms, Prophet must cut and pay $6,000,000 for this timber during the next year.

Currently, the market value is $250 per thousand board feet.

At this rate, the market price is $5,000,000. Jerry Herman, the controller, wants to recognize the loss in value

on the year-end financial statements, but the financial vice president, Billie Hands, argues that the loss is

temporary and should be ignored. Herman notes that market value has remained near $250 for many months,

and he sees no sign of significant change.

Instructions:

(a) What are the ethical issues, if any?...Explain /Discuss your response

(b) Is any particular stakeholder harmed by the financial vice presidents decision?...Who is it ?/ Who are they ?

(c) What should the controller do?... WHY ??