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Requirements 1. What is the fundamental ethical issue? Who are the affected parties? 2. If you were a sales representative at Darby Company, how would you respond to Spencer?s request? Why? 3. If you were Spencer?s manager and you discovered his plan, how

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Spencer Wilkes is the marketing manager at Darby Company. Last year, Spencer recommended;the company approve a capital investment project for the addition of a;new product line. Spencer?s recommendation included predicted cash inflows for five;years from the sales of the new product line. Darby Company has been selling the new;products for almost one year. The company has a policy of conducting annual postaudits;on capital investments, and Spencer is concerned about the one-year post-audit;because sales in the first year have been lower than he estimated. However, sales have;been increasing for the last couple of months, and Spencer expects that by the end of;the second year, actual sales will exceed his estimates for the first two years combined.;Spencer wants to shift some sales from the second year of the project into the;first year. Doing so will make it appear that his cash flow predictions were accurate.;With accurate estimates, he will be able to avoid a poor performance evaluation.;Spencer has discussed his plan with a couple of key sales representatives, urging them;to report sales in the current month that will not be shipped until a later month.;Spencer has justified this course of action by explaining that there will be no effect on;the annual financial statements because the project year does not coincide with the fiscal;year??by the time the accounting year ends, the sales will have actually occurred.

 

Paper#76973 | Written in 18-Jul-2015

Price : $22
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