Thank you in advance. CA 24-12, p. 1457 CA24-12 ETHICS (Reporting of Subsequent Events) In June 2017, the...

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Accounting

Thank you in advance.
CA 24-12, p. 1457
CA24-12 ETHICS (Reporting of Subsequent Events) In June 2017,the board of directors for McElroy Enterprises Inc. authorized thesale of $10,000,000 of corporate bonds. Jennifer Grayson, treasurerfor McElroy Enterprises Inc., is concerned about the date when thebonds are issued. The company really needs the cash, but she isworried that if the bonds are issued before the company's year-end(December 31, 2017) the additional liability will have an adverseeffect on a number of important ratios. In July, she explains tocompany president William McElroy that if they delay issuing thebonds until after December 31 the bonds will not affect the ratiosuntil December 31, 2018. They will have to report the issuance as asubsequent event which requires only footnote disclosure. Graysonexpects that with expected improved financial performance in 2018,ratios should be better.
Instructions

(a) What are the ethical issues involved?

(b) Should McElroy agree to the delay?

Answer & Explanation Solved by verified expert

3.7 Ratings (391 Votes)

a One ethical issue I discovered was that if there is a delay in the issuance of the bonds the company would be painting inaccurate financial position to people such as creditors for the 2017 year because it would make the company appear more See Answer

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Thank you in advance.CA 24-12, p. 1457CA24-12 ETHICS (Reporting of Subsequent Events) In June 2017,the board of directors for McElroy Enterprises Inc. authorized thesale of $10,000,000 of corporate bonds. Jennifer Grayson, treasurerfor McElroy Enterprises Inc., is concerned about the date when thebonds are issued. The company really needs the cash, but she isworried that if the bonds are issued before the company's year-end(December 31, 2017) the additional liability will have an adverseeffect on a number of important ratios. In July, she explains tocompany president William McElroy that if they delay issuing thebonds until after December 31 the bonds will not affect the ratiosuntil December 31, 2018. They will have to report the issuance as asubsequent event which requires only footnote disclosure. Graysonexpects that with expected improved financial performance in 2018,ratios should be better.Instructions(a) What are the ethical issues involved?(b) Should McElroy agree to the delay?