Case Study

Case Study Unit 1

3. An ethical dilemma that we now face is whether to share this information with our other investors or not. It is to decide if we are going to accept the dividend check even though we have a net loss. The information regarding the season ticket revenue does provide reliable information to an outsider when we are looking at the revised statements. If we were to look at the pre-revised it would not, but the new ones show that it has not been received yet and is not taken into consideration when preparing the balance sheet. The $100,000 advertising revenue does affect the economic reality of the transaction. It has not been received and therefore can’t be accounted for and the end of 2007. As for the revisions and whether to share with the other investors or not, we definitely should. We have a loss in the first year and the investors have to be aware of this for there own good. We also have to share this information with the bank so we could potentially apply for a loan extension and hope to repay the loan as soon as we have positive revenue from the new season ticket holders.

4.

A) The shareholders of the company would be the ones harmed. They invested into this company, which came out at a loss, and in turn would loose money on their investment. If they were not told about the status of the company they would have no idea what is going on and choose to take their dividend checks out.

B) They would be harmed because they are investing into a company with a loss and need to be aware of the situation. They need to be told about all the issues so they can decide how they are going to fix the problems.

C) The rights or claims that would be violated are the rights to the customers and also the rights and claims to the banks for their loans.

D) The specific interests that are at conflict is the ethics case in whether to tell the other investors what is going on in the company.

E) The responsibilities are to confess to the other investors...