Ethics Case A Strive for Excellence Corporation has several current notes receivable on its year- end balance sheet. While collection seems certain, it may be delayed beyond one year. Because of this, the controller wants to re-classify these notes as non- current. Strive for Excellence Corporation's treasurer also thinks that collection will be delayed but does not favor re-classification because this will reduce the current ratio from 1.5:1 to .8:1. This reduction in current ratio is detrimental to company prospects for securing a major loan. Answer the following questions: Should the controller re-classify the notes? Give your reasons. Does the treasurer's position pose an ethical dilemma for the controller? Explain your answer. Ethics Case B The ABC Company has a bonus arrangement, which grants the financial vice president and other executives a $30,000 bonus if the net income exceeds the previous year's by $1,000,000. Noting that the current financial statements report an increase of $950,000 in the net income, Vice President IM Boss asks Good Follower, the controller, to reduce the estimate of warranty expense to $60,000. The present estimate of warranty expense is $500,000 and is known by both Boss and Follower to be a fairly "soft" amount. Answer the following questions: Should Follower lower her estimate? What ethical issue is at stake? Would anyone be harmed by the change in estimate? Is Boss acting ethically? Ethics Case C Phil Mickelson received a phone call from a well-known professional sports gambler, Billy Walters. Billy asked Phil about Phil's plan to repay the gambling debt that Phil owed Billy. Phil responded that he will wire the money very soon. Billy was happy to hear the news and then offered a hot stock tip: buy shares in the food company Dean Foods. Billy indicated that the share price will soar after the company's planned spinoff. Billy commented that the money Phil will make in the stocks can cover more than the gambling debt. Answer the following questions: Should Phil buy the stocks of Dean Foods? If so, would Phil be acting ethically? What ethical issue is faced by Billy and Phil? Would anyone be harmed by the stock purchase