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Should the controller re-classify the notes

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Reference no: EM133127909

Question - Health Corporation has several current notes receivable on its year-end balance sheet. While collection seems certain, it may be delayed beyond one year. Because of this, the controller wants to re-classify these notes as non-current. Health's treasurer also thinks that collection will be delayed but does not favor re-classification because this will reduce the current ratio from 1.5:1 to 0.8:1. This reduction in current ratio is detrimental to company prospects for securing a major loan.

1. Should the controller re-classify the notes? Give reasoning.

2. Does the treasurers position pose an ethical dilemma for the controller. Explain.

Reference no: EM133127909

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