Window Dressing Ltd is suffering declining sales of its principal product and profitability has declined significantly. The company requires external funding and is about to approach the bank for a huge loan.

The managing director has suggested in order to make the company appear profitable to the bank, the annual depreciation expense should be reduced by falsely extending the useful of asset. This would increase profits and the bank would be inclined to grant the much needed loan.

Briefly discuss if the managing directors actions are ethical