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ETHICS CASE #1

Oscar Gamble, Shields Corporation’s Controller is concerned that net income may be lower this year. As a result, he is afraid that upper-level management might recommend cost reductions by laying off accounting staff. Gamble knows that amortization is a major expense for Shields. The company currently uses the double-declining balance method, and he is thinking of changing to the straight-line method.

However, this change would be highlighted in the statement of retained earnings as a cumulative-effect adjustment and management must prove that the new principle will give a reliable and more relevant financial presentation in the statements.

Instead, he is contemplating increasing estimated useful lives and residual values. That would decrease amortization expense (and increase income). Best of all, this change in estimate will be handled prospectively and not be highlighted in the current or future years’ financial statements. Oscar thinks this approach could save his job and those of his staff.

Instructions:

• Identify and describe more than one ethical perspective in resolving the identified dilemma.
• Clarify the advantages and disadvantages of implementing each ethical perspective.
• Determine and support a proposed solution.

PAPER FORMAT:

• No cover page necessary.
• The first page heading should have a clear title including ACCT2217 Accounting Ethics Case Study, ACCT2217 Fall2021, Instructor name, your name, and which case you have selected to write about.
• Typed in Times Roman 12 font,
• Double spaced using paragraph format.
• paper requirments: Identification of ethical
  issue(s);
  b. Stakeholder identification;
  c. Two solutions, including
  advantages/disadvantages and ethical considerations for each solution; and,
  d. Final decision, including why
  this solution was chosen