question : what do you agree and disagree with the situation bellow ? respond to it and For your response, you must acknowledge what is presented, then, further the conversation by adding additional information that helps clarify understanding in 5 to 10 sentence

sitiation : ethical issue

The ethical issue being addressed in this example is the fact that Ms. Green's actions were done intentionally. What this causes is that now the financial statements for High Mountain Lumbers will be misrepresented. By inflating the percentage completion of work-in-process inventory, these statements will present a misleading picture for the company. In the current position, inflating their completion rate will cause future financial misstatements.

The inflation of the percentage completion of the work-in-process inventory would cause itself to be over valuated. The cost of goods sold for the year will show as being lower, therefore resulting in a higher gross profit showing in the year. Because of this, the income statement for High Mountain Lumbers will show higher profits for the year. Similarly, the end work-in-process section for their balance sheet will also show higher values and will result in higher amount of bonuses for both Pines and Lopez.

If Green does not correct the overstatements reflected on the company's financial statements, they will be impacted in a bug way because profits will be inflated. This way, the company's current assets will be inflated as well but will still show the wrong picture of the company.

Lopez's justification when she said "Determining the percent complete always requires judgement. Whatever the percent complete, we'll finish the Work-in-Process Inventory first thing next year" does not solve the problem created by inflating the ending Work-in-Process inventory. This is due to the product cost incurred in the next year will be charged to the costs of goods sold instead. Therefore, this will result in a higher cost of goods sold and a lower gross profit for the following year.

The ethical issue is that the financial statements of High Mountain Lumbers will show a incorrect representation of the financial position of the company. Furthermore, there are legal consequences for presenting inaccurate data for a company. I think that Green should first of all ask for the correction of the percentage completion of the ending Work-in-Process inventory. This will result in the correct presentation of the company's financial statement.