Concept explainers
J. Talbot is the
Required
a. How will the write-off affect the following year’s return on assets ratio?
b. How will the write-off affect the asset and income growth percentages?
c. Would writing off the garbage trucks violate any of the standards of ethical professional practice shown in Exhibit 4.4 of Chapter 4?
d. Explain how the components of the fraud triangle relate to this case.
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- Ethics and professional conduct in business Tonya Latirno is a certified public accountant (CPA) and staff accountant for Kennedy and Kennedy, a local CPA firm. It had been the policy of the firm to provide a holiday bonus equal to two weeks salary to all employees. The firms new management team announced on November 15 that a bonus equal to only one weeks salary would be made available to employees this year. Tonya thought that this policy was unfair because she and her co- workers planned on the full two-week bonus. The two-week bonus had been given for 10 straight years, so it seemed as though the- firm had breached an implied commitment. Thus, Tonya decided that she would make up the lost bonus week by working an extra six hours of overtime per week over the next five weeks until the end of the year. Kennedy and Kennedys policy is to pay overtime at 150% of straight time. Tonyas supervisor was surprised to see overtime being reported, because there is generally very little additional or unusual client service demands at the end of the calendar year. However, the overtime was not questioned, because firm employees are on the honor system in reporting their overtime. Discuss whether the firm is acting in an ethical manner by changing the bonus. Is Tonya behaving in an ethical manner?arrow_forwardEthics and professional conduct in business The director of marketing for Truss Industries Inc.. Ellen Knutson, had the following discussion with the company controller. Bud Wyckoff. on February 26 of the current year: Ellen: Bud, it looks like I'm going to spend much less than indicated on my February budget. Butt: I'm glad to hear it. Ellen: Well. I'm not so sure it's good news. I'm concerned that the president will see that I'm under budget and reduce my budget in the future. The only reason that I look good is that we've delayed an advertising campaign. Once the campaign hits in May. I'm sure my actual expenditures will go up. You see. we are also having our sales convention in May. Having the advertising campaign and the convention at the same time is going to kill my May numbers.arrow_forward
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