Chapter 19, Problem 19.3BYP

To determine

Stock options: Stock options are the stock-based compensation plans provided in the form of an option to buy certain number of shares for a certain price during certain period.

Facts of the case: In an audit survey by an auditor, DR, a CPS firm, it is found that a multinational company, MC Industries, being a long-time client of the firm, has changed its accounting method of inventory from last-in-first-out to first-in-first-out. On investigation, it is found that this change is done to increase the net income above $44,000,000, through which it facilitates the increase in the number of shares to executives as per the stock option plan, otherwise which it will not happen.

To discuss: The ethical dilemma, impact of following controller’s suggestions, the beneficiaries, and the injured