Oscar Gamble Case Study

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Oscar Gamble acts as the Corporate Controller of Shields. He estimates that the net income of the business will be lower for the current financial year. Thus, he is concerned that the upper management may implement cost reductions through laying off some employees, especially the accounting team. Moreover, Gamble also knows that amortization is one of the major expenses of the company. Presently, the company implements the “double-declining balance method” to calculate the amortization expense. However, Gamble is thinking to replace the current method with the “straight-line method” (“Ethics in Accounting, n.d.). Consequently, the change in the method will be reported in the statement of retained earnings as a “cumulative effect adjustment.”…show more content…
Two are better than one and in this case, without having to divulge his personal interests, chances are that management may support such changes in the accounting method of amortization. Oscar must provide the advantages of using the straight line method, such as less complication in calculation and balance allocation of the expense. In this way, personal interests can be aligned with company’s interests and other stakeholders. In case the decision of the company is to lay off some employees, then it can be that this action is better off and strategically convenient for the business. In the case the management team decides to remain in the current method, then other solutions can be done without the need to lay off some employees. Other solutions can be recommended. III. Relevant Stakeholders a. Oscar Gamble, as Shields Corporation’s Controller: high net income means security and profitability of the company; low net income may mean lay off of some employees to reduce expenses, thus somehow increasing income; b. Accounting staff : high net income means security of employment, while low net income may mean lay off of employees including the accounting staff to reduce administration expenses; c. Owners of the company: high net income means…show more content…
However, in the case of Oscar’s intention to change the method of calculating the amortization expense for the relevant financial period, it can be said that this remedy is not critically conflicting with the betterment of the company. His action of change is actually desirable because it may increase net income, which is good for the business. However, the ethical dillema only starts because of the inclusion of his personal motives and interests that blurs professionalism and ethical decision making for the company. In the end, Oscar does not need to isolate himself with this case. He can always consult the higher team, without the need to divulge his personal interest. In addition, decreasing the depreciation expense through changing the method calculation may not be the best solution after all, but status quo. Under status quo, the situation of high and lows of the business is considered normal. Increasing and decreasing revenues and rising costs are considerable parts of each period that are fairly and normally reported in the financial
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