The date is November 18, 2011. You are the chief executive officer of Omega Software-a pub- licly owned company that is currently in financial difficulty. Omega needs new large bank loans if it is to survive.

You have been negotiating with several banks, but each has asked to see your 2011 financial statements, which will be dated December 31. These statements will, of course, be audited. You are now meeting with other corporate officers to discuss the situation, and the following sugges- tions have been made:

1. "We are planning to buy WordMaster Software Co. for $8 million cash in December. The owners of WordMaster are in no hurry; if we delay this acquisition until January, we'll have
$8 million more cash at year-end. That should make us look a lot more solvent."

2. "At year-end, we'll owe accounts payable of about $18 million. If we were to show this liabil- ity in our balance sheet at half that amount-say, $9 million-no one would know the differ- ence. We could report the other $9 million as stockholders' equity and our financial position would appear much stronger."

3. "We owe Delta Programming $5 million, due in 90 days. I know some people at Delta. If we were to sign a note and pay them 12 percent interest, they'd let us postpone this debt for a year or more."

4. "We own land that cost us $2 million but today is worth at least $6 million. Let's show it at
$6 million in our balance sheet, and that will increase our total assets and our stockholders' equity by $4 million."

Instructions

Separately evaluate each of these four proposals to improve Omega Software's financial state- ments. Your evaluations should consider ethical and legal issues as well as accounting issues.