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2.Discuss Heather Meyer’s ethical dilemma.As the controller, Heather is responsible for ensuring all generally accepted accounting principles(GAAP) are followed. GAAP has guidelines regarding impairment losses, and when to test for impairment (Spiceland, Nelson, & Thomas, 2018). It appears the CEO wants to keep the net income high, so it does not reflect that the new frozen line is not doing well. A disclosure note would have to be included with the financial statements to describe the impairment loss (Spiceland et al., 2018). Heather should explain to the CEO why his method is not the appropriate way to handle the situation, and what steps she will take to handle the equipment andexpenses. Although the CEO does not want to include the immediate write-down, this is the proper way to handle impairment losses regardless of how it affects net income. Spiceland, J., Nelson, M. & Thomas, W. (2018). Intermediate accounting(9th ed.). New York, NY: McGraw-Hill Education.Ethics Case 11–10 Requirement 12013 expense using CEO's approach:$42,000,000 Cost $4,200,000 Previous annual depreciation ($42,000,000 ÷ 10 years) x 2 years 8,400,000 Depreciation to date (2011–2012) 33,600,000 Book value ÷ 3 Estimated remaining life (2013–2015) $11,200,000 New annual depreciation 2013 income would include only depreciation expense of $11,200,000.2013 expense using Heather's approach:$42,000,000 Cost $4,200,000 Previous annual depreciation ($42,000,000 ÷ 10 years) x 2 years 8,400,000 Depreciation to date (2011–2012) 33,600,000 Book value 12,900,000 Write-down
20,700,000 New depreciable base ÷ 3 Estimated remaining life (2013–2015) $ 6,900,000 New annual depreciation 2013 income would include depreciation expense of $6,900,000 and an assetwrite down of $12,900,000 for a total income reduction of $19,800,000. Using Heather's