View the step-by-step solution to:

Question

EYK10-7. Accounting Ethics Case Sunrise Pools, Inc., is being sued by the crescent club for

negligence when installing a new pool on crescent club's property. Crescent club alleges that the employees of Sunrise Pools damaged the foundation of the clubhouse and part of the golf course while operating heavy machinery to install the pool.

The lawsuit is for $1.5 million. At the time of the alleged incident, Sunrise Pools carried only $600,000 of liability insurance.

while reviewing the draft of Sunrise Pools' annual report, its president deletes all references to this lawsuit. She is concerned that disclosure of this lawsuit in the annual report will viewed by Crescent Club as admission of Sunrise's wrongdoing, even though she privately admits that Sunrise Employees were careless and believes that Sunrise Pools will be found liable for an amount in excess of $1 million. The president sends the amended draft of the annual report to the vice president of finance with a note stating that the lawsuit will not be disclosed in the annual report and that the lawsuit will not be disclosed to the board of directors.

required

Is the president's concern valid? What ethical problems will the vice president of finance face if he follows the president's instructions?

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes