You as a Home Owner In both situations, sales of comparable homes in the same location provide information about the value of your home. However, since your home has not been recently sold, the specific home value (asset value) is unknown. The ethical dilemma arises in precisely what objective information to report. For example, if 10 homes in the immediate area have sold within the last three months, which of those sales would you report? If the real estate assessor's office asked for three comparable sales, what information might be provided? The assessor's office will be concerned about the objectivity of the reporting choices made by the home owner.

Because home owners wish to minimize their tax burden, many municipalities employ a city property appraiser to verify the value of real estate. This appraiser assesses whether the current assessment amount is a fair representation of a house's current market value.

Alternatively, because home owners wish to maximize the sales price of their homes they might choose different comparable home sales prices to report to a buyer than those chosen for the real estate assessor. Thus, although buyers may request comparable home sales information from the seller, they will usually undertake their own investigation (that is, hire their own appraiser) to verify the value of the home.

The ethical issues are related to objective (not selective) reporting. Having independent parties make an independent assessment of the market price of your home mitigates some of the ethical issues related to objective reporting.

You as a Creditor The primary factor you would want to consider is when the notes payable listed on Overnight's balance sheet must be paid. If the notes payable must be paid within the next year, Overnight has more than twice as much in current liabilities than it has in current assets. A current ratio of .48:1 indicates that Overnight may have difficulty paying its bills as they become due. And, given Overnight's modest net income of $800, it probably will not be able to generate sufficient cash flow to pay $37,000 of liabilities within the next year. One alternative would be to lend to Overnight, subject to receiving a personal guarantee of the debt from Overnight's owners. In essence, the personal assets of Overnight's owners would serve as additional collateral for the credit that your company is providing Overnight.