Question:
In your response highlight ethics & governance, accountant's role in changing depreciation methods, stakeholders and the impact of AASB116? Students must provide 8 academic references to support their response
Pringles Ltd is a large department store that has used the straight-line depreciation method since the company was first formed. For the year ended 30 June 2015, the company made a record profit and management expected these high profits to continue at least into 2016 and 2017, although economists were generally predicting an economic slowdown and a subsequent fall in profits in 2018 and 2019. The general manager, Peter Pringle, approached the accountant, Marion Mason, and asked her if she could find a way to reduce the profit in the next couple of years and transfer it to 2018 and 2019 when things may not be going so well. ‘This would give us consistent profits over the next few years and keep our shareholders happy,' said Peter.
Although Marion did not feel that Peter's reason for the change was justified, she was concerned that her contract with the company would not be renewed if she upset the general manager. After some consideration, Marion decided to change the depreciation method from the straight-line method to the sum-of-years'-digits method. Marion did not disclose this change in the notes to the financial statements as she felt that the reason given by Peter would not give a good impression
Task Details: Based on the information provided, and using current theories and models in Accounting, students need to analyse how they apply to the given situation. Specific research supporting recommendations need to be provided.
Research requirements: Students need to support their analysis with reference to relevant material from the text and a minimum of eight (8) suitable, reliable, current and academically acceptable sources - this should include at least 2 peer-reviewed academic journal articles.
Presentation: 2000 +/- 10% word short report format.
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