Ethics Case 3 - Shenandoah Furniture Company

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Ethics Case 3:

Shenandoah Furniture Company is a small publicly traded company. The Company pays annual bonuses based on a percentage of net income. Randolph Hundley, the controller of Shenandoah Furniture Company, has noticed that the Company holds equity securities in a variety of companies that were purchased as strategic investments. A few of these securities are currently valued above cost, but most are valued below cost at the current time. Hundley suggests to his assistant, Todd that they should treat the securities with unrealized gains as trading securities and those with unrealized losses should be treated differently—with the unrealized losses being reported in other comprehensive income.

Instructions

Answer the following questions:

• Will Hundley’s suggestion, improve the company’s net income (loss)?

• Is there anything unethical about Hundley’s suggestion?

• Who are the stakeholders that would be affected by this decision?

• What additional analysis can you draw from the information. Please think about what possibly could be going on within the scenario other than the issues you analyze for answering the questions. Do some additional critical thinking