Ethic Case

On December 15, 2019, Juan Gonzlez, Controller of ABC Industries, was reviewing several reports on production costs for 2019. One amount in these reports caught his attention and worried him: the cost of advertising. During October, the company began a costly ad campaign to sell some of its slower-moving products. It is still too early to know if the ad campaign was successful. There has been a lot of internal debate about how to report advertising costs. Some argue that advertising costs should be reported as a production cost, just like direct materials and direct labor. Therefore, this cost should be accounted for as manufacturing overhead and reported as part of inventory costs until sold. Others disagreed and believed that this cost should be reported as a current period expense, so as not to overestimate net income. Others argue that it should be reported as prepaid advertising and reported as a current asset. The president points out that the company is experiencing financial difficulties and that the option should be chosen that does not affect the profits of the business and makes it easier to obtain a necessary loan for the next year. At the same time, you prefer an option that attracts less attention from financial analysts and regulators. INSTRUCTIONS Prepare an email to the president of the company, Mara Rivas, where -Identify and summarize the ethical issue that exists in this situation; -discuss who the affected parties are in this situation if it is done in a misleading or incorrect way, and -describe the treatment you recommend as correct, regardless of the president's message. -Clearly explain the effect on net income of your recommendation Please can I have references links so I can get info and learn