Chapter 19, Problem 19.5BYP

To determine

Ethical Case: The case is related to the consideration of advertising cost and different persons have the different views to report the advertising cost which is incorrect according to GAAP.

The vice president of finance of Company S believed that the advertising cost is the part of cost of production. Mr. M argued that the advertising cost is the cost of current year which should be shown from the income statement.

Other employees state that the advertising cost should be considered as prepaid expenses. The president of the company states that the advertising cost is the part of inventory.

To explain: (a) The identification of stakeholders, (b) An ethical issue, (c) The activities should be done by the Mr. S.