Wanda Is Faced with an Ethical Dilemma

question 29

Multiple Choice

Wanda is faced with an ethical dilemma. She knows her supervisor, the CFO, wants to accelerate the recoding of revenue to an earlier period to "make the numbers," but Wanda is convinced this would violate GAAP. If Wanda reasons at stage 4 of Kohlberg's model she is most likely to:

• A) Make a decision based on what is in her own best interests
• B) Consider the interests of the stakeholders but decide based on what is in her best interests
• C) Refuse to record the transaction as desired by the CFO
• D) Inform the board of directors of the difference of opinion with the CFO

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Definitions:

Upstream Intra-entity Gross Profits

Upstream intra-entity gross profits are profits derived from transactions between a parent company and its subsidiary, where the subsidiary sells goods or services to the parent, requiring careful account adjustments when preparing consolidated financial statements.

Noncontrolling Interest

The portion of equity in a subsidiary not attributable directly or indirectly to the parent company.

Excess Amortization Expense

Excess Amortization Expense occurs when the amount of amortization expenses exceeding what is considered normal or necessary for an accounting period, often due to aggressive depreciation of assets.

Father-Son-Grandson Configuration

A hierarchical arrangement often used in genealogy, databases, or organizational structures to represent relationships.