northwest. The first store began operations in 1965, and the company hasHappyville, Inc., operates a chain of department stores located in thesteadily grown to its present size of 44 stores. Two years ago, the board ofdirectors of Happyville approved a large-scale remodeling of its stores toattract a more upscale clientele.Before finalizing these plans, two stores were remodeled as a test. Lisa Perezassistant controller, was asked to oversee the financial reporting for these teststores, and she and other management personnel were offered bonuses basedon the sales growth and profitability of these stores. While completing thefinancial reports, Perez discovered a sizable inventory of outdated goods thatshould have been discounted for sale or returned to the manufacturer. Shediscussed the situation with her management colleagues; the consensus was toignore reporting this inventory as obsolete, since reporting it would diminishthe financial results and their bonuses.Required:1. According to the Standards of Ethical Conduct for Practitioners ofManagement Accounting and Financial Management, would it be ethicalfor Perez not to report the inventory as obsolete?2. Would it be easy for Perez to take the ethical action in this situation?

A code of morals sets out an association's moral rules and best practices to follow for genuineness,…

Required: 1. According to the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management, would it be ethical for Perez not to report the inventory as obsolete? 2. Would it be easy for Perez to take the ethical action in this situation?

Required: 1. According to the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management, would it be ethical for Perez not to report the inventory as obsolete? 2. Would it be easy for Perez to take the ethical action in this situation?

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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northwest. The first store began operations in 1965, and the company has
Happyville, Inc., operates a chain of department stores located in the
steadily grown to its present size of 44 stores. Two years ago, the board of
directors of Happyville approved a large-scale remodeling of its stores to
attract a more upscale clientele.
Before finalizing these plans, two stores were remodeled as a test. Lisa Perez
assistant controller, was asked to oversee the financial reporting for these test
stores, and she and other management personnel were offered bonuses based
on the sales growth and profitability of these stores. While completing the
financial reports, Perez discovered a sizable inventory of outdated goods that
should have been discounted for sale or returned to the manufacturer. She
discussed the situation with her management colleagues; the consensus was to
ignore reporting this inventory as obsolete, since reporting it would diminish
the financial results and their bonuses.
Required:
1. According to the Standards of Ethical Conduct for Practitioners of
Management Accounting and Financial Management, would it be ethical
for Perez not to report the inventory as obsolete?
2. Would it be easy for Perez to take the ethical action in this situation?

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