BC Ltd has incorporated a bonus plan that rewards the board of directors (executive members) by providing a bonus of 3 per cent of reported profits. This is an Accounting-based incentive that has the advantage which the accounting results may be based on subunit or divisional performance. "A well-informed labour market will motivate management to work to maximise the value of its firm. Underperformance might lead to dismissal and, if the labour market is efficient in disseminating data, a 'failed' manager might have difficulty attracting a position with comparable pay elsewhere." (Deegan, 2020) Requirement: 1) Using Positive Accounting Theory (PAT), discuss the bonus theme in general and why the bonus plan (Accounting-based) was put in place in ABC Ltd? Demonstrate superior knowledge of the theory and key concepts. Excellent interpretation with extensive elaboration of relevant subtopics, appropriately weighted and within the prescribed word count. Demonstrated in-depth understanding and application of key concepts and terminology relating to the accounting fundamentals.
ABC Ltd has incorporated a bonus plan that rewards the board of directors (executive members) by providing
a bonus of 3 per cent of reported profits. This is an Accounting-based incentive that has the advantage which
the accounting results may be based on subunit or divisional performance.
"A well-informed labour market will motivate management to work to maximise the value of its firm.
Underperformance might lead to dismissal and, if the labour
manager might have difficulty attracting a position with comparable pay elsewhere." (Deegan, 2020)
Requirement:
1) Using Positive Accounting Theory (PAT), discuss the bonus theme in general and why the bonus plan
(Accounting-based) was put in place in ABC Ltd?
Demonstrate superior
knowledge of the theory and
key concepts. Excellent
interpretation with extensive
elaboration of relevant subtopics, appropriately
weighted and within the
prescribed word count.
Demonstrated in-depth
understanding and
application of key concepts
and terminology relating to
the accounting
fundamentals.
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