You are a staff accountant with Munson-Libra Industries, a multinational company that manufactured and sold orthopedic devices.After the fiscal year-end, you are working with the controller to prepare the geographic disclosures.Yesterday you presented the controller with the following summary information:

($ in millions)

DomesticLibya EgyptFranceCayman Islands Total

Revenues$845$222$265$343$2,311$3,986

Operating Income 145 768821 642 972

Assets 1,005 30129038 2851,919

Today, you find the following memo on your desk:Great job!Let's combine the data like this:

($ in millions)

DomesticAfricaEurope & Other ForeignTotal

Revenues $845 $487$2,654$3,986

Operating Income 145164663 972

Assets1,005 591 3231,919

Because of political instability in North Africa, let's not disclose specific countries.In addition, we restructured most of our French sales and some of our U.S. sales to occur through our offices in the Cayman Islands.This allows us to avoid paying higher taxes in those countries.The Cayman Islands has a 0% corporate income tax rate.We don't want to highlight our ability to shift profits to avoid taxes.

Analytical Model for Ethical Decisions. Ethical codes are informative and helpful, but motivation to behave ethically must come from within oneself and not just from the fear of penalties for violating professional codes. Presented below is a sequence of steps that provide a framework for analyzing ethical issues. These steps can help youapply your own sense of right and wrong to ethical dilemmas.

Requirement: Analyze the ethical dilemma presented above using the steps below.

Step 1. Determine the facts of the situation. This involves determining the who, what, where, when and how.

Step 2. Identify the ethical issue and the stakeholders. Stakeholders may include shareholders, creditors, management, employees, and the community.

Step 3. Identify the values related to the situation. For example, in some situations confidentiality may be an important value that might conflict with the right to know.

Step 4. Specify the alternative courses of action.

Step 5. Evaluate the courses of action specified in step 4 in terms of their consistency with the values identified in step 3. This step may or may not lead to a suggested course of action.

Step 6. Identify the consequences of each possible course of action. If step 5 does not provide a course of action, assess the consequences of each of possible course of action for all of the stakeholders involved.

Step 7. Make your own decision and take any indicated action.

The analytical steps outlined above provide a framework you can use to evaluate ethical situations like this.