Some people are tempted to make their finances look worse to get financial aid. Companies sometimes also manage their financial numbers in order to accomplish certain goals. Earnings management is the planned timing of revenues, expenses, gains, and losses to smooth out bumps in net income. In managing earnings, companies' actions vary from being within the range of ethical activity, to being both unethical and illegal attempts to mislead investors and creditors.

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Discuss whether you think each of the following actions (adapted from www.finaid.org/fafsa/maximize.phtml) to increase the chances of receiving financial aid is ethical.

1. Spend down the student's assets and income first, before spending parents' assets and income.