Disclosure of Estimates

Anonymous
timer Asked: May 1st, 2019
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Question Description

Nancy Tercek, the financial vice president, and Margaret Lilly, the controller, of Romine Manufacturing Company are reviewing the financial ratios of the company for the years 2017 and 2018. The financial vice president notes that the profit margin on sales ratio has increased from 6% to 12%, a hefty gain for the 2-year period. Tercek is in the process of issuing a media release that emphasizes the efficiency of Romine Manufacturing in controlling cost. Margaret Lilly knows that the difference in ratios is due primarily to an earlier company decision to reduce the estimates of warranty and bad debt expense for 2018. The controller, not sure of her supervisor’s motives, hesitates to suggest to Tercek that the company’s improvement is unrelated to efficiency in controlling cost. To complicate matters, the media release is scheduled in a few days.

Answer the following questions in the Discussion Board:

  1. What, if any, is the ethical dilemma in this situation?
  2. Should Lilly, the controller, remain silent? Give reasons.
  3. What stakeholders might be affected by Tercek’s media release?
  4. Give your opinion on the following statement and cite reasons: “Because Tercek, the vice president, is most directly responsible for the media release, Lilly has no real responsibility in this matter.”

Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2016). Full disclosure in financial reporting.Intermediate accounting (16th ed.). (p. 1457). New York, NY: John Wiley & Sons, Inc.

Tutor Answer

vince_muchoki
School: Purdue University

Hey buddy, here is the paper. Do not hesitate to contact me for queries or revision, I'm here for you. cheers!!

Running head: ESTIMATES

1

DISCLOSURE OF ESTIMATES
Name
Course
Institution Affiliation

ESTIMATES

2

1. What, if any, is the ethical dilemma in this situation?
The moral quandary is that this circumstance is the purpose of the organization's execution
proficiency. It is the purpose behind the expansion of net edge on deals proportion which is
caused by a before gauge made by the organization with an end goal to lessen the guarantee and
awful obligation costs. The controller knows and notes that the change in monetary proportions
which demonstrates the effectiveness of the organization is not a consequence of the controlling
expense as expressed by the Vice President. The difference in budgetary proportions is a
consequence of the organization's choice to diminish appraisals of guarantee and awful
obligatio...

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Anonymous
awesome work thanks

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