(b) The directors of Pharma Ghana Ltd are very confident about the quality of the products that the company sells. Hist
Posted: Mon May 30, 2022 7:36 am
(b) The directors of Pharma Ghana Ltd are very
confident about the quality of the products that the company
sells. Historically, the level of complaints received about product
quality has been low. However, when calculating their warranty
provision, they have over-estimated the number of items that will
be returned as faulty. The directors believe that this is
acceptable because it is important for financial statements to
exhibit prudence.
Required:
Discuss the ethical issues raised by the treatment of
the warranty provision.
confident about the quality of the products that the company
sells. Historically, the level of complaints received about product
quality has been low. However, when calculating their warranty
provision, they have over-estimated the number of items that will
be returned as faulty. The directors believe that this is
acceptable because it is important for financial statements to
exhibit prudence.
Required:
Discuss the ethical issues raised by the treatment of
the warranty provision.