After reading the following, discuss in detail the following questions.
On May 31, 2012, Express Delivery, the overnight shipper,
had assets of $21,000,000 and total liabilities of $13,000,000,000. Included
among the assets were property, plant and equipment with a cost of
$17,000,000,000. During the year ended May 31, 2012, Express delivery earned
total revenues of $28,000,000 and had total expenses of $25,000,000,000 of
which $8,000,000,000 was depreciation expenses. The CFO and the controller are
concerned that the results of 2012 will make investors unhappy. Additionally,
both hold stock options to purchase shares at a reduced price, so they would
like to se the market price continue to grow. They decide to “ extend” the life on assets so that
depreciation will be reduced to $5,000, 000,000 for 2012.
- Discuss the motivation for the changes in the asset lives.
- Discuss the impact of the change on the net income.
- Discuss whether you find the change ethical or unethical
- Discuss whether AICPA code of conduct section 50 and 300 will help you make an ethical decision.