Question 9 (10 marks)

Part A (5 marks)

Type your answer in the space provided.

[Answer here]

Explain the difference between current and non-current liabilities.

Part B (5 marks) Type your answer in the space provided.

Window Dressing Ltd is suffering declining sales of its principal product and profitability has declined significantly. The company requires external funding and is about to approach the bank for a huge loan.

The managing director has suggested in order to make the company appear profitable to the bank, the annual depreciation expense should be reduced by falsely extending the useful of asset. This would increase profits and the bank would be inclined to grant the much needed loan.

Required:

[Answer here]

Briefly discuss if the managing directors actions are ethical.