SHAREHOLDERS’ INTEREST AND ETHICAL ISSUES

Step 2—The Ethical Issue and the Stakeholders: The ethical issue at hand is whether or not it is morally permissible to misallocate costs in order to gain a financial advantage. There are two primary stakeholders involved in this situation; Don Nelson and Judith Prince. Don wants to manipulate the numbers in order to give himself a higher salary while Judith needs to decide if following through with such unethical practices is worth risking her own reputation as well as that of Grandma's Cookie Company. Step 3—Values: At stake here are fairness, honesty, accuracy, integrity, trustworthiness and good faith between all parties involved within this conflict. Step 4—Alternatives: The two primary alternatives available are either engaging in unethical accounting practices by fudging numbers or choosing not too which will mean reporting accurate information but having lower profits than anticipated due to taxes on higher reported income. Step 5—Evaluation of Alternatives in Terms of Values: Misallocating funds goes against each value stated earlier except for possibly trustworthiness depending on how much both parties can actually be trusted if they go through with it without informing anyone else at Grandma’s Cookie Company about what they are doing. However reporting accurate information shows integrity on behalf of both parties as well as honesty even if it leads them away from greater profits due taxes being higher than expected on reported income given their actual expenses were true/accurate. Ultimately no one will benefit from unfairness especially outside parties who mightinvest or purchase stock from Grandma’s Cookie Company only for its value later be reduced due fraudulent accounting practices found out after investing money into it blindly believing everything was done according tho law & regulations set forth by governments & other bodies regulating businesses such as theirs/. Step 6—Consequences: If Don & Judith choose go down route fudging numbers consequences short term include boosting profits but raising risk chance being found out leading potential lawsuits fines criminal charges etc risks associated with any form fraud long term only way avoid getting caught commit fraud multiple times across long period time continuing same type activities thus increasing chances getting discovered however legitimate alternative has consequences itself lowered profits potentially displeasing shareholders because will result decreased dividends them tax implications due having report accurately yet pay more taxes because number essentially “inflated" whereas could have been less had itemized properly when originally registered business first started up eventually other companies within industry may find themselves scrutinized regulators who then look elsewhere determine whether similar activities taking place there perhaps leading larger investigation wider scope potentially ruining reputations hundreds thousands people involved industry who just happen work companies wrongfully accused similar acts never committed Step 7 - Decision : After considering all facts values alternatives consequences making decision should become easier clear best course action purely terms moral responsibility ethics involve NO misleading misrepresentation any forms whatsoever pertaining company’s finances books once made decision stick promise ensure nothing like this ever happens again future judgement day always comes seems so better prepared face day head held high knowing did right thing

Sample Solution

Step 1—The Facts: Grandma’s Cookie Company purchased a factory building for a lump-sum price. Don Nelson, the company controller, suggested to Judith Prince, the chief financial officer, that they allocate an abnormally higher share of the purchase price to land instead of building in order to reduce depreciation expense and boost income. This would also increase their profit-sharing bonus and hopefully increase the stock prices.