PBA$4807$ MAY$/$JUNE $2022$

Question $2($Accounting and Ethics$)$

$(15$ marks$)$

Marang Letsatsi is the MD and main shareholder of Marang $\text{'}$s Bar & Grill. To expand, the business is applying for a R$250000$ bank loan. To get the loan, Marang is considering two options for beefing up the owners' equity of the business:

Option$1$: Issue R$100000$ of ordinary shares for cash. A friend has been wanting to invest in the company. This may be the right time to extend the offer

Option $2$: Transfer R$100000$ of Marang $\text{'}$s personal land to the business. and issue ordinary shares to Marang. Then after obtaining the loan Marang can transfer the land back to himself and zero out the ordinary shares

Required

Use the ethical decision$-$making model to answer the following questions:

What is the ethical issue $(1)$

Who are the stakeholders? $(4)$ what are the possible consequences to each? $(2)$

Analyze the alternatives from the following standpoints a$)$ economic, b$)$ legal, and c$)$ ethical $(6)$

What would you do$?$ How would you justify your decision? How would your decision make you feel afterwards? $(2)$