Carol Keene, corporate comptroller for Dumaine Industries, is trying to decide how to present “Property, plant, and equipment” in the balance sheet. S
Carol Keene, corporate comptroller for Dumaine Industries, is trying to decide how to present “Property, plant, and equipment” in the balance sheet. She realizes that the statement of cash flows will show that the company made a significant investment in purchasing new equipment this year, but overall she knows the company’s plant assets are rather old. She feels that she can disclose one figure titled “Property, plant, and equipment, net of depreciation,” and the result will be a low figure. However, it will not disclose the age of the assets. If she chooses to show the cost less accumulated depreciation, the age of the assets will be apparent. She proposes the following.
\r\nProperty, plant, and equipment, net of depreciation $10,000,000
\r\nrather than Property, plant, and equipment $50,000,000
\r\nLess: Accumulated depreciation 40,000,000
\r\nNet book value $10,000,000
\r\nInstructions
\r\nAnswer the following questions.
\r\n(a) What are the ethical issues involved?
\r\n(b) What should Keene do?