1.using the code of ethics for management accountant, recommend the approach that Emily should take. 2. Suppose Tim insist that his suggested accounting treatment be implement. What should Emily do?

Emily Henson, controller of an oil exploration division, has just been approached by Tim Wilson, the divisional manager. Tim told Emily that the projected quarterly profits were unacceptable and that expenses need to be reduced. He suggested that a clean and easy way to reduce expenses is to assign the exploration and drilling cost of four dry holes to those of two successful holes. By doing so, the cost could be capitalized and not expensed, reducing the cost that need to be recognized for the quarter. He further argued that the treatment is reasonable because the exploration and drilling all occurred at the same field; thus, the unsuccessful efforts really were the cost of identifying the successful holes. "Besides", he argued, "even if the treatment is wrong, it can be corrected in the annual financial statements. Next quarter's revenues will be more and can absorb any reversal without causing any severe damage to that quarter's profits. It's this quarter's profit that need some help. Emily was uncomfortable with the request because Generally Accepted Accounting Principles do not sanction the type of accounting measures proposed by Tim. 1. Using the code of ethics for management accountants, recommend the approach that Emily should take. 2. Suppose Tim insists that his suggested accounting treatment be implemented. What should Emily do