Let’s Discuss: Ethical Issue (Source 12-1 Textbook)
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Raffies Kids, a nonprofit organization that provides aid to victims of domestic violence, low-income families, and special-needs children, has a 30-year, 5% mortgage on the existing building. The mortgage requires monthly payments of $3,000. Raffies bookkeeper is preparing financial statements for the board and, in doing so, lists the mortgage balance of $287,000 under current liabilities because the board hopes to be able to pay the mortgage off in full next year. Of the mortgage principal, $20,000 will be paid next year if Raffies pays according to the mortgage agreement. The board members call you, their trusted CPA, to advise them on how Raffies Kids should report the mortgage on its balance sheet.
For this weeks discussion please respond to the questions listed below. In addition to your initial response, for full credit, please be sure to respond to more than two other students initial responses as well.
What is the ethical issue?
Provide and discuss the reason for your recommendation.
This discussion will address the following Module Outcomes:
MO1: Apply the method of accounting for current liabilities. (CO1)
MO2: Explain the financing of operations through long-term liabilities, particularly bonds payable. (CO4)
MO3: Identify the importance of ration analysis in decision making. (CO2, CO3)
Consult the Discussion Posting Guide for information about writing your discussion posts. It is recommended that you write your post in a document first. Check your work and correct any spelling or grammatical errors. When you are ready to make your initial post, click on “Reply.” Then copy/paste the text into the message field, and click “Post Reply.”
To respond to a peer, click Reply beneath her or his post and continue as with an initial post.