Reference no: EM132960641

Question - Mike Trenach is the owner and president of Digital Imagery and More Ltd., a company in the multimedia industry. The revenue of the business is about $16 million a year. In the past few years, Mike has spent the following:

-Swimming pool built at his home: $40 000

-Renovations to his cottage: $7500

-Landscaping around his home: $4000

-Plumbing and air conditioning installed in his home: $6000

Although each of these expenditures was of a personal nature, Trenach requested that invoices for the charges be sent to his company, Digital Imagery and More Ltd. All of the expenditures were recorded in the books of the company in various expense accounts.

Q1. As his accountant, what will you advise Mike to do? In your answer, be sure to include accounting principles and CPA Code of Conduct reference.

Q2. Write Mike an email explaining your position on the matter. Forward this email to a friend and ask your friend to answer the following questions:

Is the email professional?

Is the message convincing that there is an ethical issue?

Does the message clearly explain why this is an ethical and accounting issue?

If your friend was Mike, what would he/she do?