(Answered) Question - prophet company signed a long term purchase

Accounting

Question - Prophet Company signed a long term purchase contract to buy timber from the U.S. Forest Service 300 per thousand board feet. Under these terms, Prophet must cut and pay 6,000,000 for this timber during the next year. Currently the market value is 250 per thousand board feet. At this rate, the market prices is 5,000,000. Jerry Herman, the controller, wants to recognize the loss in value on the year-end financial statements, but the financial vie president, Billie Hands, argues that the loss is temporary and should be ignored. Herman notes that market value has remained near 250 for many months, and he sees no sign of significant change.

A.) What are the ethical issues, if any?

B.) Is any particular stakeholder harmed by the financial vice president's decision?

C.) What should the controller do?

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