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In: Accounting

Kali flower, manufactures spinning machines for the textile industry. The company had purchased USD 100,000 of...


Kali flower, manufactures spinning machines for the textile industry. The company had purchased USD 100,000 of small hand tools to use in its business. The company's accountant recorded the tools as an asset account and the company was going to write them off in 20 years. Management wanted to write these tools off as an expense of this year in their financial statement, because revenues of this year is abnormally high and expected to be lower in the future. The management is thinking to expand their business. As per the revenues the business units can be expanded to other cities. The company expect to increase the production to high level by starting more units.  

Management is continuously pressurizing the accountant not to include some of the transactions in the financial statement to bring a positive image on stakeholders. Many investors are keen to invest in shares of the Kali flower manufacturers. The company is expecting an annual audit from the international audit firm. This situation may put them in critical circumstances.   

a. In your opinion, what are the violations of the ethical norms by considering the intentions of the management of the company?   


b. How are they going to satisfy the auditors in the above case and what important principles they
are neglecting. Explain your answer.
it should be 400 words for each part of question.
thank you

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Expert Solution

ekkarill92 answered 2 years ago
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