Ima Hogg Wants to Borrow Money to Expand Her Business

Essay

Ima Hogg wants to borrow money to expand her business.Her plan is to open a new store on each of the major islands in the Caribbean.She knows that her bank will want to see a full set of this year's financial statements before agreeing to lend the company money.Ima tells the company accountant,Tom Trueheart,to double the useful lives of all of the company's equipment before he prepares the financial statements this year.
1.What effect will doubling the useful lives for all of the equipment have on this year's income statement? How will the balance sheet be affected? Why would Ima Hogg ask Tom Trueheart to do this?
2.Would it be ethical for Tom to do as Ima asks? Why?