The ethical accountant for Khouri Industries, is trying to decide how to present property, plant, and equipment in the notes to the balance sheet. She realizes that the statement of cash flows will show that the company made a significant investment in purchasing new equipment this year, but overall she knows the company's plant assets are rather old. She feels that she can disclose one amount for the title "Property, plant, and equipment, net of depreciation," and the result will be a low figure. However, it will not disclose the assets' age. If she chooses to show the cost less accumulated depreciation, the assets' age will be visible. She proposes the following:

Instructions
Discuss the financial reporting issues, including any ethical issues.

Transcribed Image Text:

Property, plant, and equipment, net of depreciation $10,000,000 rather than Property, plant, and equipment Less: Accumulated depreciation $50,000,000 (40,000,000) $10,000,000 Net book value