$16-82.$ Ethics and E$$ciencies Keewee Company manufactures a single product for the military. Keewee Company had steady work, but it only had a return on investment of $6$ percent. The CEO of Keewee Company did a test $$ight of Keewee$$s product and subsequently had a heart attack and died. The board of directors hired a new CEO of the company. The board of directors had been disappointed for many years at the meager $6$ percent rate of return. The board of directors o$$ered the new CEO a substantial bonus if he raised the return on investment to $10$ percent. The new CEO went about his task of raising the return on investment. It turned out to be easier than he ever imagined. By installing a new standard cost system, he substantially improved e$$ciencies in the operations of the company. He made remarkable progress in turning the company around. In fact, the new CEO anticipated a return on investment of $15$ percent for the year. This created a dilemma for the new CEO. The board had promised a bonus if he reached the $10$ percent threshold, but no additional bonus if he exceeded the $10$ percent threshold. He discovered that if he deferred some revenue until next year, and prepaid some of next year$$s expenses, he would achieve a return on investment of $11$ percent. $($The company should have debited a prepaid expenses account, but they debited expenses instead.$)$ He justi$$ed this action by saying he was $$saving for a rainy day.$$ Before the end of the year, he renegotiated his contract with the board of directors, which speci$$ed additional bonuses if he exceeded the $10$ percent percent return on investment. Required Why would the new CEO want to defer some revenue and prepay some expenses? Is this ethical?