Scenario 2:

You are the accountant for Daniel Company, and you are responsible for preparing the financial statements for 2022. Towards the end of 2021, Daniel loaned $100,000 to its president. This is a material amount and was recorded as a note receivable by Daniel. However, you are unsure of how to classify this note on the 2022 ending balance sheet, and you decide to ask the president about the due date. The president responds by saying that they never really set a due date, and repayment might happen in 2022 or maybe a couple of years later when they become financially secure. The president suggests classifying the note as a current asset in the usual manner to increase working capital and the current ratio, which would please creditors and shareholders.

Required: From financial reporting and ethical perspectives, what are your thoughts on the president's suggestion?

Submission Criteria:

Craft a well-structured response addressing the financial reporting and ethical perspectives for each scenario

Support your response with relevant accounting principles and ethical standards

Articulate the potential impact of the suggested actions on financial reporting and stakeholders

Provide clear and logical reasoning for your recommendations