What are the advantages and disadvantages of a utilitarian approach, moral-rights approach, and practical approach? ETHICS CASE
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What are the advantages and disadvantages of a utilitarian approach, moral-rights approach, and practical approach?
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ETHICS CASE #1 Ch.9 Oscar Gamble, Shields Corporation's Controller is concerned that net income may be lower this year. As a result, he is afraid that upper-level management might recommend cost reductions by laying off accounting staff. Gamble knows that amortization is a major expense for Shields. The company currently uses the double-declining balance method, and he is thinking of changing to the straight-line method. However, this change would be highlighted in the statement of retained earnings as a cumulative effect adjustment and management must prove that the new principle will give a reliable and more relevant financial presentation in the statements. Instead, he is contemplating increasing estimated useful lives and residual values. That would decrease amortization exnense (and nerease income Best of all, this change in estimate will be handled prospectively and not be highlighted in the current or future years' financial statements. Oscar thinks this approach could save his job and those of his staff. Instructions: 1. Identify and describe more than one ethical perspective in resolving the identified dilemma. 2. Clarify the advantages and disadvantages of implementing each ethical perspective. 3. Determine and support a proposed solution. What would you recommend to Oscar gamble? On the one hand, it would seem that opting for changes is residual values and useful lives could result in investors and creditors getting less useful information about Shield's income. On the other hand, gamble may feel he has an obligation to protect his staff ETHICS CASE #1 Ch.9 Oscar Gamble, Shields Corporation's Controller is concerned that net income may be lower this year. As a result, he is afraid that upper-level management might recommend cost reductions by laying off accounting staff. Gamble knows that amortization is a major expense for Shields. The company currently uses the double-declining balance method, and he is thinking of changing to the straight-line method. However, this change would be highlighted in the statement of retained earnings as a cumulative effect adjustment and management must prove that the new principle will give a reliable and more relevant financial presentation in the statements. Instead, he is contemplating increasing estimated useful lives and residual values. That would decrease amortization exnense (and nerease income Best of all, this change in estimate will be handled prospectively and not be highlighted in the current or future years' financial statements. Oscar thinks this approach could save his job and those of his staff. Instructions: 1. Identify and describe more than one ethical perspective in resolving the identified dilemma. 2. Clarify the advantages and disadvantages of implementing each ethical perspective. 3. Determine and support a proposed solution. What would you recommend to Oscar gamble? On the one hand, it would seem that opting for changes is residual values and useful lives could result in investors and creditors getting less useful information about Shield's income. On the other hand, gamble may feel he has an obligation to protect his staff
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Answer Explanation A Utilitraian Approach The Utilitarian Approach assesses an action in terms of it... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-1118845899
3rd edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
Posted Date:
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