The directors of Entity B are planning to acquire an investment in the near future but the entity currently lacks sufficient cash. They prefer to raise finances from an equity issue in order to maintain the entity's currently high gearing level. In order to attract the maximum level of investment possible, they are making strategies to maximize their retained earnings through several transactions with related parties.

Required: (a) Comment if there is any creative accounting involved in the scenario above with an appropriate explanation to support your answer. (b) Explain whether there are any ethical implications arising from the situation.