AP6-5 Horizon Corporation manufactures personal computers. The company began operations in 2009 and reported profits for the years 2009 through 2016.

Ethics

AP6-5 Horizon Corporation manufactures personal computers. The company began operations in 2009 and reported profits for the years 2009 through 2016. Due primarily to increased competition and price slashing in the industry, 2017’s income statement reported a loss of $20 million. Just before the end of the 2018 fiscal year, a memo from the company’s chief financial officer to Jim Fielding, the company controller, included the following comments:

If we don’t do something about the large amount of unsold computers already manufactured, our auditors will require us to record a write down. The resulting loss for 2018 will cause a violation of our debt covenants and force the company into bankruptcy. I suggest that you ship half of our inventory to J.B. Sales, Inc., in Oklahoma City. I know the company’s president, and he will accept the inventory and acknowledge the shipment as a purchase. We can record the sale in 2018 which will boost our loss to a profit. Then J.B. Sales will simply return the inventory in 2019 after the financial statements have been issued.

Required:

Discuss the ethical dilemma faced by Jim Fielding. What is the issue? Who are the parties involved? What factors should Jim consider in making his decision?

 

"Get yourself this Paper or a similar one at an unbeatable discount!"

"Order a similar paper and get 15% discount on your first order with us
Use the following coupon
"FIRST15"

Order Now