For each case below, answer the following three questions:

1. What is the accounting issue in this case? What ethical decision needs to be made?
2. Who are the stakeholders?
3. Analyze the potential impact on the stakeholders from the following standpoints: (a) economic, (b) legal, and (c) ethical.

Case 2

Strasburg Loan Company is in the consumer loan business. Strasburg borrows from banks and loans out the money at higher interest rates. Strasburgs bank requires Strasburg to submit quarterly financial statements to keep its line of credit. Strasburgs main asset is Notes Receivable. Therefore, Uncollectible-Account Expense and Allowance for Uncollectible Accounts are important accounts for the company. Raquel Lanser, the companys owner, prefers that net income reflect a steady increase in a smooth pattern, rather than an increase in some periods and a decrease in other periods. To report smoothly increasing net income, Lanser underestimates uncollectible-account expense in some periods. In other periods, Lanser overestimates the expense. She reasons that the income overstatements roughly offset the income understatements over time.