Question

In: Accounting

GCU’s Statement on the Integration of Faith and Work states, “We recognize and embrace the potential...

GCU’s Statement on the Integration of Faith and Work states, “We recognize and embrace the potential of human work for furthering the greater good and strive to further the good of the culture and the society.” Consider how you might approach the following scenario in a manner that is in accord with the spirit of GCU’s perspective of the integration of faith in one’s workplace.

Scenario:

Tones Company purchased a warehouse in a downtown district where land values are rapidly increasing. Gerald Carter, controller, and Wilma Ankara, financial vice president, are trying to allocate the cost of the purchase between the land and the building. Noting that depreciation can be taken only on the building, Carter favors placing a very high proportion of the cost on the warehouse itself, thus reducing taxable income and income taxes. Ankara, his supervisor, argues that the allocation should recognize the increasing value of the land, regardless of the depreciation potential of the warehouse. Besides, she says, net income is negatively impacted by additional depreciation and will cause the company's stock price to go down. (Based on Concepts for Analysis 10-6 from Intermediate Accounting.)

Write a paper (500‐750 words) that addresses the following:

Recommendation of an ethical decision in the scenario.

Explanation of how the ethical decision supports the good of the culture and the society.

Implications of applying a Christian worldview within the accounting workplace, in general.

Solutions

Expert Solution

If the land is undervalued so that a higher depreciation expense is assigned to the building, management interests are served. The lower net income and reduced tax liability save cash to be used for management purposes. By contrast, stockholders and potential investors are misled by the inaccurate cost values. They will have been deprived of information concerning the significant impact of changing real estate values on this holding.

The ethical question centers on whether to allocate the cost of the purchase on the fair market value of land and building or whether to determine the allocation in view of the potential effect on net income. Carter faces an ethical dilemma if Ankara will not accept Carter’s position. Carter should specify alternative courses of action and carefully assess the consequences of each before deciding what to do.

For basket (lump-sum) purchases of land and buildings, costs should be allocated on the ratio of fair market values of the land and buildings.


Related Solutions

Read GCU's "Statement on the Integration of Faith and Work." One of the unique features of...
Read GCU's "Statement on the Integration of Faith and Work." One of the unique features of the statement is that it calls you to consider your career choices as a vocation. Define vocation and explain how viewing your career as a vocation, rather than merely a "job," impacts the nature of what you do at work and your relationship to the people you work with and for. How might you apply the concept of work as vocation in your studies...
The ability of a mouse to recognize the odor of a potential predator is essential to...
The ability of a mouse to recognize the odor of a potential predator is essential to the mouse’s survival. Typically, the source of these odors are major urinary proteins (Mups). 30% of lab mice sells exposed to chemically produced cat Mups responded positively (i.e. recognized the danger of the lurking predator). Consider a sample of 100 lab mice cells, each exposed to chemically produced cat MUPS. Let X represents the number of cells that respond positively. a) Explain why the...
Explain the United States' integration into regional unions.
Explain the United States' integration into regional unions.
For most of the 1800s, the United States did not recognize the copyrights of books written...
For most of the 1800s, the United States did not recognize the copyrights of books written by foreign authors. As a result, many U.S. publishers printed “pirated”—unauthorized—editions of Charles Dickens and other British authors without paying them royalties. A history of book publishing noted, “[U.S.] publishers claimed that pirating [foreign] works allowed their prices to remain low, which in turn made the works more accessible to the public at large.” There were (eventually successful) attempts in Congress to recognize foreign...
For most of the 1800s, the United States did not recognize the copyrights of books written...
For most of the 1800s, the United States did not recognize the copyrights of books written by foreign authors. As a result, many U.S. publishers printed “pirated”—unauthorized—editions of Charles Dickens and other British authors without paying them royalties. A history of book publishing noted, “[U.S.] publishers claimed that pirating [foreign] works allowed their prices to remain low, which in turn made the works more accessible to the public at large.” There were (eventually successful) attempts in Congress to recognize foreign...
Identify three ways in which we could embrace spiritual wellness within an organization with our medical...
Identify three ways in which we could embrace spiritual wellness within an organization with our medical staff
In considering real-world situations, we must recognize the fact that by "wages" in this chapter, we...
In considering real-world situations, we must recognize the fact that by "wages" in this chapter, we mean the following, except the Multiple Choice total price that employers pay to obtain labor. total income earned by households. total compensation of workers. total of direct payments and fringe benefits to workers.
If we recognize that our perceptions are always limited, what can we do to improve our...
If we recognize that our perceptions are always limited, what can we do to improve our perception making? How can we make our perceptions less limited?
Scenario You recognize your role as a client advocate and have decided to work with the...
Scenario You recognize your role as a client advocate and have decided to work with the American Nurses Association related to health policy issues. You choose to write a letter to your national legislator in your voting district addressing legal policies associated with genetic discrimination that you have seen either in person or in the news. Write a professional letter to your federal senator demonstrating your client advocacy about genetic discrimination and how it correlates to legal and professional policies....
As a Department Leader, you recognize the importance of having your staff work in groups and...
As a Department Leader, you recognize the importance of having your staff work in groups and teams. What strategies and tools will you use to ensure that your team works well together?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT