Tones Company purchased a warehouse in a downtown district where land values are rapidly increasing. Gerald Carter, the controller, and Wilma Ankara, financial vice president, are trying to allocate the cost of the purchase between the land and the building. Noting that depreciation can be taken only on the building, Carter favors placing a very high proportion of the cost on the warehouse itself, thus reducing taxable income and income taxes. Ankara, his supervisor, argues that the allocation should recognize the increasing value of the land, regardless of the depreciation potential of the warehouse. Besides, she says, net income is negatively impacted by additional depreciation and will cause the company's stock price to go down.

Questions

What stakeholder interests are in conflict?

What ethical issues does Carter face?

How should these costs be allocated?

Gerald and Wilma certainly have a conflict in this scenario. What tools may assist Gerald and Wilma in resolving the conflict?

Should they consult the county property tax collector for the breakdown of property taxes between the building and the land?

Should they visit a realtor to determine the market value of comparable buildings and land?

Please include references down below