Question A

Fillups Company had to make a decision on whether to use the full-cost or successful efforts method. Both of these methods are allowed by GAAP. The ethical considerations implied here revolved around decision-making process involving the two methods. The consideration that Fillups made was that of choosing a method that is more suitable and had a positive effect on the balance sheet. The ethical consideration here shows that the decision was made more based on the final outcome than the process involved. The full-cost method accounts for both direct and indirect costs hence reducing future costs and harm that might accrue to the company.

Question B

An accounting alternative should not solely be based on financial statement effects.  This is a good thing for the organization, but there should be other considerations. Among them is ensuring that the accounting alternative is accepted by the relevant standards. This helps the company to avoid implied legal implications. Another consideration is the accuracy in the presentation that is accorded by an accounting alternative. This helps to ensure that the financial statements present a true and fair view of the company’s affairs. Considering the effect that an accounting alternative would have on other stakeholders is also relevant. This is because it helps the company to act in an ethical manner while fulfilling its obligations.

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