91Ó°ÊÓ

Accounting information is a diverse term and includes budgets, production worksheets, income statements, balance sheet, cash flow statements, and the pro forma reports of a company. In simple words, it is the compiled data of all the business transactions of a company.

Users of the accounting information: The various groups such as the creditors, or the stakeholders, or the internal management need the accounting information to analyze the business performance. These groups are the users of the accounting information.

(a) The current and the future users of the financial statements, such as the investors, creditors, are the stakeholders to be considered.

(b) The ethical issues that underlines the dispute are to maintain the integrity and honesty while reporting the financial statements to correctly estimating the cost of the mothballing, the profits manipulation and to assure that the stakeholders have the useful information, and whether the costs involved will cost the job security of the individuals involved.

(c) The alternatives available are whether to apply the expense recognition principle and allocate the expense over the useful life of the plant, or to not apply the expense recognition principle and expensing the mothballing later when it occurs.

(d) The main concern is to correctly estimate the cost of the mothballing. By applying the expense recognition principle and allocating the expense over the useful life of the plant results in lower profits and higher rate for consumers, On the other hand, non-application of the expense recognition principle and expensing the mothballing later when it occurs generates higher profits, lower rates for consumers and a greater potential job security.

(e) The company should estimate the expense of the mothballing and accrue the expense over years. This method will state the earnings accurately. Also, the effect on the consumer should be considered. Deferring the expense allocation will benefit the consumers today at the expense of the consumers in future.