Ethical Question!!!

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
<BR>The company for which you work has completely renovated their offices; new carpet, new<BR>walls, new work-stations, new furniture even new ceiling tiles all at a cost of $51 million. You<BR>have made extensive inquiries of experts in the design and fashion field, and they say the<BR>layout and design is already out of date. Your company will need to replace it all within ten<BR>years and it will be worth little when replaced. You have calculated a depreciation expense<BR>using an accelerated method because you figure the company will gain better â??serviceâ?? from it<BR>in earlier years when it newer and fresher. The Chief Financial Officer has taken this<BR>depreciation expense and factored it into the financial projections for the coming year. She<BR>realises such a large depreciation expense will lead to a small loss and has asked you to reestimate<BR>and recalculate. Explain in detail why you took the original action you did and your<BR>response to the Chief Financial Officer, possibly ethically questionable request.<BR><BR>How do u guys think abt this ethical question????

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Ethical Question!!!

    Hi<BR><BR>I suppose it could be considered less than ethical since it may give an inaccurate profilt figur in the P/L. However if the compaay did replace the offices in ten years time and they had used minimal depreciation over the years, it could result in a bigger chunk taken at the end (since whatever figure is left on the books will need to be cleared) - the depreciation would catch up with them!<BR><BR>I say the best way to depreciate it is aver the full life of the asset, office furniture isn't quite like plant machinery which could loos efficiency over the years in addition to the expense of its up keep.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Ethical Question!!!

    ethics is next to thuffolk.<BR><BR>who are you working for?<BR><BR>What ethics are involved in depreciation anyway?<BR><BR>Depreciation is just a way of spreading cost over expected useful life, if one person says 10 years I'm sure someone else would say 15 years.<BR><BR>Just do it!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Ethical Question!!!

    Hi,<BR><BR>:-( Im not working for anyone...This ethical question is a part of homework question and im stucking on it....havent got any idea how to answer.<BR><BR>Thanks Bryan and Neih for reply!

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