Ethical Dilemma Task
The net income of Union Carbide increased in in a single year by over $200 million, due almost entirely to three changes in accounting principle: (a) the depreciation method was changed, resulting in lower expense, (b) interest costs during construction were capitalized rather than expensed, and (c) the method for recognizing investment tax credits (not available under current tax law) was changed to a method that reduced expenses.
What ethical question does this situation suggest? (Why might the company make such changes?)
In your post discussing this case please include the following:
Step 1: State the facts
Step 2: What are the ethical issues and who are the stakeholders?
Step 3: What values are at stake?
Step 4: What are the alternatives?
Step 5: Evaluate the alternatives in terms of values
Step 6: What are the consequences?
Step 7: Make a decision. What should the company do?