You have recently been employed by a large clothing retailer. One of your tasks is to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You have recently been employed by a large clothing retailer. One of your tasks is to help prepare financial statements for cxtenal distribution. The company's lender, First Savings & Loan, requires that financial statements be prepared according to generally accepted accounting principles (GAAP). During the months of November and December 2021, the company spent SI million on a major TV advertising campaign. The $1 million incļuded 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 costs to advertising expense, he asks you to set up an asset called prepaid advertising and to wait until 2022 to record advertising expense. The CFO explains, "This 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, if we expense the advertising 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. Failure 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 adventising costs incorrectly if asked to do so by your superior? REQUIREMENT 2: Does your answer change if you believe that misreporting will save employee jobs? KEEP IN MIND THE FOLLOWING: Post your INITIAL RESPONSE to the prompt early in the assignment period so that others have time to respond to you. RESPOND constructively to at least 2 other students. You have recently been employed by a large clothing retailer. One of your tasks is to help prepare financial statements for cxtenal distribution. The company's lender, First Savings & Loan, requires that financial statements be prepared according to generally accepted accounting principles (GAAP). During the months of November and December 2021, the company spent SI million on a major TV advertising campaign. The $1 million incļuded 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 costs to advertising expense, he asks you to set up an asset called prepaid advertising and to wait until 2022 to record advertising expense. The CFO explains, "This 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, if we expense the advertising 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. Failure 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 adventising costs incorrectly if asked to do so by your superior? REQUIREMENT 2: Does your answer change if you believe that misreporting will save employee jobs? KEEP IN MIND THE FOLLOWING: Post your INITIAL RESPONSE to the prompt early in the assignment period so that others have time to respond to you. RESPOND constructively to at least 2 other students.
Expert Answer:
Answer rating: 100% (QA)
1 Ethical Dilemma about Advertising Expenses A moral predicament emerge on a promoting costs that w... View the full answer
Related Book For
International Business and the New Realities
ISBN: 978-0136090984
2nd Edition
Authors: S. Tamer Cavusgil, Gary Knight, John R. Riesenberger
Posted Date:
Students also viewed these accounting questions
-
You have recently been hired by Essex Manufacturing to work in its newly established treasury department. Essex Manufacturing is a small company that produces cardboard boxes in a variety of sizes....
-
You have recently been hired as the assistant controller for Stanton Industries, a large, publicly held manufacturing company. Your immediate superior is the controller who, in turn, is responsible...
-
You have recently been hired as the assistant controller for Stanton Industries. Your immediate superior is the controller who, in turn, reports to the vice president of finance. The controller has...
-
In Exercises 6780, begin by graphing the square root function, f(x) = x. Then use transformations of this graph to graph the given function. h(x)=x + 2-2
-
Consumers in a certain area can choose between three package delivery services: APS, GX, and WWP. Each week, APS loses 10% of its customers to GX and 20% to WWP; GX loses 15% of its customers to APS...
-
In an article about crime in the United States, Newsweek (Jan. 10, 1994) quoted FBI statistics for 1992 stating that of blacks slain, 94% were slain by blacks, and of whites slain, 83% were slain by...
-
Analyze the patient satisfaction data in Table B. 17 for multicollinearity. Satisfaction Age Severity Surgical-Medical Anxiety 68 55 50 0 2.1 77 46 24 1 2.8 96 30 46 1 3.3 80 35 48 1 4.5 43 59 58 0 2...
-
An XYZ April 2041 bond with a 5.5 percent coupon interest rate and a par value of $1,000 recently had a price of 95.625. Calculate the following: a. When will the bond mature? b. How much would you...
-
Derive an expression for V = V(x,t) of the glider at the bottom of the incline plane by applying the kinematic equations of motion. x = distance traveled by glider t = time for glider to travel...
-
Table 5.5 gives data on average public teacher pay (annual salary in dollars) and spending on public schools per pupil (dollars) in 1985 for 50 states and the District of Columbia. To find out if...
-
$437.00 favorable. $572.00 unfavorable. $782.00 favorable. $572.00 favorable. $437.00 unfavorable. Information concerning Johnston Co.'s direct materials costs is as follows: Standard price per...
-
Explain what we mean by mutually exclusive events.
-
Three percent of the products produced by the new assembly line are defective. Five percent of the products produced by the old machine are defective. The new machine produced 70 % of the total...
-
What do we mean by the union of two events? What do we mean by the intersection of two events? Use a Venn diagram to illustrate this point.
-
Fifty percent of the economists in the country are conservatives. The other 50%are liberals. Thirty percent of the conservative economists and 20%of the liberal economists believe that we will have a...
-
Explain what we mean when we say two events are independent.
-
X=et B is a Solution to X=-3 5 2 -24 Find B
-
Question 6.10 Current and deferred tax worksheets and tax entries From the hip Ltd?s statement of profit or loss for the year ended 30 June 2007 and extracts from its statements of financial position...
-
Various Web sites list cultural blunders or faux pas (false steps) people make in their international interactions. Neglecting to develop relationships (as in Just sign the contract, Im in a hurry!)...
-
You are Vice President for International Sales at AgriCorp, a large trading company that exports processed foods to Africa. You are often frustrated that African countries impose high tariffs...
-
Assume you are a manager at a firm interested in doing business in Russia. As part of your initial analysis, top management would like to know about the level of currency and financial risks...
-
\(X\) is the number of bits in error in the next four bits transmitted. What is the expected value of the square of the number of bits in error? Now, \(h(X)=X^{2}\). Therefore, \[ \begin{aligned}...
-
In Example 4.1, \(X\) is the current measured in milliamperes. What is the expected value of power when the resistance is 100 ohms?
-
Correlation between height and weight for players on the 2014 Brazil World Cup Team, using data from all 23 players on the roster. State whether the quantity described is a parameter or a statistic...
Study smarter with the SolutionInn App