I’m working on a accounting discussion question and need an explanation and answer to help me learn.
Al Issa, Norah, controller for Nadec Corporation, is preparing the company’s income statement at year-end. She notes that the company lost a considerable sum on the sale of some equipment it had decided to replace. Al Issa does not want to highlight it as a material loss since she feels that will reflect poorly on her and the company. She reasons that if the company had recorded more depreciation during the assets’ lives, the losses would not be so great. Since depreciation is included among the company’s operating expenses, she wants to report the losses along with the company’s expenses, where she hopes it will not be noticed.
a. What are the ethical issues involved?
b. What should Al Issa do?
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