Reference no: EM133630851

Discussion Post

Question I. Do you think that fixed assets should be valued at historical cost or fair market value? Why?

Question II. Access the Wall Street Journal and locate an article related to accounting, finance, or business practices that is of interest to you. Share the link to the article and provide a summary of the article and your reaction to it.

Essay Assignment

Scenario:

Marvin Company is a subsidiary of Hughes Corp. The controller believes that the yearly allowance for doubtful accounts for Marvin should be 8% of gross accounts receivable. Given the recession and the high interest rate environment, the president, nervous that the parent company might expect the subsidiary to sustain its 10% growth rate, suggests that the controller increase the allowance for doubtful accounts to 9%. The president thinks that the lower net income, which reflects a 6% growth rate, will be a more sustainable rate for Marvin Company. (Based on Critical Thinking Case 6-10 in the textbook.)

Directions:

Write a paper (500 to 750 words) that addresses the following:

Question I. Assuming a recessionary environment with tight credit and high interest rates, identify steps Marvin Company might consider to improve the accounts receivable situation, and then evaluate each step identified in terms of the risks and costs involved.

Question II. Should the controller be concerned with Marvin Company's growth rate in estimating the allowance? Explain your answer.

Question III. Does the president's request pose an ethical dilemma for the controller? Provide your rationale.

Question IV. How does a Christian worldview influence the decision-making in this case? Explain.