Discuss heather meyers ethical dilemma

Assignment Help Financial Accounting

Reference no: EM13827188

At the beginning of 2011, the healthy life food company purchased equipment for 42M to be used in the manufacture of a new line of gourmet frozen fods. the equimpent was estimated to have a 10 year service life and no residual value. the straight line depreciation method was used to measure deprecation for the 2011 and 2012 late in 2013 it became apparent production for 2 more years(2014 and 2015) and then discontinue the line at theta time, the equipment will be sold for minima scarp value.

The controller Heather Meyer was asked by harvey Dent the company’s chief exe officer to determine the appropriate treatment of the change in service life of the equipment, Heather determined that there has been an impairment of value requiring an immediate write-down of the equipment. Of 12900,000 The remaining book value would then be depreciated over the equipment revised service life.

The CEO doesn’t like Heather's conclusion because of the effect it would have on 2013 income, "Looks like a simple revision in the service life from 10 years to 5 years to me" Dent concluded "Lets go with that way, Heather"

Required

1- What is the difference in before-tax income between the CEO'S and Heather's treatment of the sitatuion?

2-Discuss Heather Meyer's ethical dilemma

Reference no: EM13827188

Questions Cloud

High fixed costs bankrupt twinkie maker : The text titled "High Fixed Costs Bankrupt Twinkie Maker" regarding the bankruptcy of Hostess Brands - maker of the renowned Twinkie! Identify the cause of the bankruptcy in terms of variable costs and fixed costs. Utilize your knowledge of costs to ..

Compute Submarines EPS for the year : Submarine Corp., earned a net income of $110,000 for 2011. Submarine's books included the following figures: Preferred stock, 2%, $30 par, 1,000 shares issued and outstanding - $30,000. Common stock, $1 par, 52,000 issued - $52,000. Compute Submarine..

Purchase of merchandise and payment of freight by mathis : Mathis Company and Reece Company use the perpetual inventory system. The following transactions occurred during the month of April: On April 1, Mathis purchased merchandise on account from Reece with credit terms of 2/10, n/30. The selling price of t..

University of phoenix material : University of Phoenix Material New Hire Communication Worksheet Select a company you are familiar with. Imagine that you work for the HR department of the company. You are tasked to develop a message to orient new hires to the company cult..

Discuss heather meyers ethical dilemma : At the beginning of 2011, the healthy life food company purchased equipment for 42M to be used in the manufacture of a new line of gourmet frozen fods. the equimpent was estimated to have a 10 year service life and no residual value. What is the diff..

Use cost-volume-profit analysis : How does the firm use “Cost-Volume-Profit Analysis” to assess performance? How would you use such a system to measure how costs change as production changes? How do you develop a “break even analysis” for a given firm and how would you use it?

Using the units-of-production method : A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 ..

Depreciation expense for the second year : Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-b..

What advances are being made in technology and algorithms : What advances are being made in technology and algorithms is helping advance the accuracy of forecasting ?

User Account

All Pages