. You have recently been employed by a large dlothing retaler. One of your tasks is to...

  

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You have recently been employed by a large dlothing retaler. One of your tasks is to help prepare finencial statements kor astema distribution. The company's lender, National Savings & Loan, requires that financial statements be prepared according to generaly accepted accounting principles (GAAP). During the months of November and December 2021, the company spent $1 milion on a major TV advertising campaign. The $1 million induded the costs of producing the commercials as well as the broadcast time purchased to run them Because the advertising will be aired in 2021 only, you charge all the costs to advertising expense in 2021, in accordance with requirements of GAAP. The company's chief financial officer (CFO), who hired you, asks you for a favor. Instead of charging the costa to advertising eapense, he asks you to set up an asset called prepaid advertising and to wait until 2022 to record advertising expense. The CFO explana "Th ad campaign has produced significant sales in 2021, but i think it will continue to bring in customers throughout 2022. By recording the ad costs as an asset, we can match the cost of the advertising with the additional sales in 2022. Besides we expense the advertsing in 2021, we will show an operating loss in our income statement. The bank requires that we continue to show profits in order to maintain our loan in good standing. Falure to remain in good standing could mean we'd have to lay off some of our recent hires REQUIREMENT 1: As a staff accountant, should you knowingly record advertising costa incomrectly if asked to do so by your superior REQUIREMENT 2: Does your anewer change if you believe that miereporting wil save employee jobs? KREP IN MIND THE FOLLOWING: • Post your INITIAL RESPONSE lo the prompt early in the assignment period so that ohers have Sie lo repond lo you • RESPOND constructively to at least 2 other students You have recently been employed by a large dlothing retaler. One of your tasks is to help prepare finencial statements kor astema distribution. The company's lender, National Savings & Loan, requires that financial statements be prepared according to generaly accepted accounting principles (GAAP). During the months of November and December 2021, the company spent $1 milion on a major TV advertising campaign. The $1 million induded the costs of producing the commercials as well as the broadcast time purchased to run them Because the advertising will be aired in 2021 only, you charge all the costs to advertising expense in 2021, in accordance with requirements of GAAP. The company's chief financial officer (CFO), who hired you, asks you for a favor. Instead of charging the costa to advertising eapense, he asks you to set up an asset called prepaid advertising and to wait until 2022 to record advertising expense. The CFO explana "Th ad campaign has produced significant sales in 2021, but i think it will continue to bring in customers throughout 2022. By recording the ad costs as an asset, we can match the cost of the advertising with the additional sales in 2022. Besides we expense the advertsing in 2021, we will show an operating loss in our income statement. The bank requires that we continue to show profits in order to maintain our loan in good standing. Falure to remain in good standing could mean we'd have to lay off some of our recent hires REQUIREMENT 1: As a staff accountant, should you knowingly record advertising costa incomrectly if asked to do so by your superior REQUIREMENT 2: Does your anewer change if you believe that miereporting wil save employee jobs? KREP IN MIND THE FOLLOWING: • Post your INITIAL RESPONSE lo the prompt early in the assignment period so that ohers have Sie lo repond lo you • RESPOND constructively to at least 2 other students

Answer rating: 100% (QA)

Requirement 1 The request made by the CFO here is certainly unethical since deferring expenses to next period will result in correct profits being sho... View the full answer