Field Company purchased a warehouse in a downtown district where land values are rapidly increasing. Adolph Phillips, controller, and Wilma Smith, financial vice-president, are trying to allocate the cost of the purchase between the land and the building .Noting that depreciation can be taken only on the building ,Philips favors placing a very high proportion of the cost on the warehouse itself, thus reducing taxable income and income taxes. Smith, his supervisor, argues tential of the warehouse. Besides, she says, net income is negatively impacted by additional depreciation and will cause the company's stock price to go down.
(a)What stakeholder interests are in conflict?
(b)What ethical issues does Phillips face?
(c) How should these costs be allocated?