The executive officers of rouse corporation have the

Assignment Help Accounting Basics

Reference no: EM13454559

The executive officers of Rouse Corporation have a performance-based compensation plan. The performance criteria of this plan is linked to growth in earnings per share. When annual EPS growth is 12%, the Rouse executives earn 100% of the shares; if growth is 16% they earn 125%. If EPS growth is lower than 8%, the executives receive no additional compensation.

In 2012,Gail Devers, the controller of Rouse, reviews year-end estimates of bad debt expense and warranty expense. She calculates the EPS growth at 15%. Kurt Adkins, a member of the executive group, remarks over lunch one day that the estimate of bad debt expense might be decreased, increasing EPS growth to 16.1%. Devers is not sure she should do this because she believes that the current estimate of bad debts is sound. On the other hand, she recognizes that a great deal of subjectivity is involved in the computation.

Instructions:

Answer the following questions.

(a) What, if any, is the ethical dilemma for Devers?

(b) Should Devers's knowledge of the compensation plan be a factor that influences her estimate?

Reference no: EM13454559

Questions Cloud

A developer has presented abc 25 million for its property : abc corp. owns a piece of land and building a few miles from its headquarters. the land originally cost abc 500000 to

Describe two business sectors you might want to work in if : bulldescribe two business sectors you might want to work in if you were an accountant and explain why in 150 to 200

Write down a 750- to 1050-word paper in apa format : write a 750- to 1050-word paper in apa format including citations and references summarizing your ideas about internal

This moduleweek you have been studying the significance of : this moduleweek you have been studying the significance of the church as the body of christ. in chapter 9 ofnbspcore

The executive officers of rouse corporation have the : the executive officers of rouse corporation have a performance-based compensation plan. the performance criteria of

The subfields of anthropology seem quite diverse in their : 1 the subfields of anthropology seem quite diverse in their specific subjects and methods. why then are they all

If you price each product separately ie using standard : suppose you are a manager of a firm that produces products x y and z.you know that there are two different types of

Permeability is the condition of being capable of : permeability is the condition of being capable of having materials flow into and out of a membrane. the permeability of

Emotional intelligence ei focuses on understanding the : emotional intelligence ei focuses on understanding the emotions and attitudes of others. to manage relationships

User Account

All Pages