On October 5, 2023, Diamond in the Blue Spruce Recruiting Group Inc.'s board of directors decided to dispose of the Blue Division. A formal plan was approved. Diamond derives approximately 79% of its income from its human resources management practice. The Blue Division gets contracts to perform human resources management on an outsourced basis. The board decided to dispose of the division because of unfavourable operating results.
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- On December 31, Year 1, the Board of Directors of Maxy Manufacturing, Inc. committed to a plan to discontinue the operations of its Alpha division. The decision represents a major strategic shift and will have a significant effect on its operations and financial results. Maxy estimated that Alpha's Year 2 operating loss would be $500,000 and that the fair value of Alpha's facilities was $300,000 less than their carrying amounts. The estimate for Year 2 turned out to be correct. Alpha's Year 1 operating loss was $1,400,000, and the division was actually sold for $400,000 less than its carrying amount. Maxy's effective tax rate is 30%. In its Year 2 income statement, what amount should Maxy report as loss from discontinued operations? OA. $350,000 B. $500,000 OC. $420,000 $600,000 D.Woorley Corporation needs to determine whether the disposal of its Tools Division qualifies as a discontinued operation. The Tools Division is one of Woorley's three major business segments. Its recent financial performance has been strong, yet Woorley believes that this segment will contract over the next three to five years. Woorley has developed a plan to dispose of the Tools Division and focus on its other two operating segments going forward. Does the disposal of the Tools Division qualify as a discontinued operation under IFRS? Use the table below to identify the criteria under IFRS for classifying a discontinued operation and whether the Tools Division disposal meets them. Criteria for Determining a Discontinued Operation What is a discontinued operation? Does the discontinued portion of the business meet the definition of a component of an entity to be considered a discontinued operation? Does the discontinued operation represent a strategic shift that has or will have a major…XYZ Co. has an intention to restructure the company. The following costs were determined: Salaries of employees that will be displaced in the implementation of restructuring Termination benefits of employees terminated as a result of the restructuring Expected losses for the new division to be established P500,000 250,000 250,250 However, only the abovementioned expenditures to be undertaken is the only data that they have. Further, the affected employees are not yet aware of the possible implementation of restructuring. Determine the provision for the restructuring.
- Little Cory Corporation is considering dropping product G41O. Data from the company's accounting system appear below: All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $117,000 of the fixed manufacturing expenses and $46,000 of the fixed selling and administrative expenses are avoidable if product G41O is discontinued.Required:a. According to the company's accounting system, what is the net operating income earned by product G41O? b. What would be the effect on the company's overall net operating income of dropping product G41O? Should the product be dropped? There is not a word length requirement for this question; however, you must show your work. sales 450,000 variable expenses 185,000 fixesd manufacturing expenses 149,000 fixed selling and administered expenses 113,000In 2020, Liyue Corp. operate business in the motor industry and has 3 main divisions, Engine, Motor accessory and Motor Dealership.Because of the overwhelming business activities booming in the engine and motor dealership divisions Liyue decided to sell its lowest earning division, the Accessories division. In a sales commitment to be executed on March 1, 2021, the provisions made it so that the division qualified under the classification “Discontinued operations” as of the end of year 2020.The following information pertains to the two cash generating units of Liyue Corp. on December 31, 2020:Engine segmentAccessories segmentMotor DealershipTotal assets 8,000,000 4,500,000 18,500,000Total liabilities 3,000,000 2,200,000 9,600,000Fair value less cost to dispose 1,800,000Sales 8,000,000 3,200,000 11,000,000Cost of sales 3,500,000 1,200,000 7,250,000Expenses 1,000,000 700,000 3,000,000Income tax 500,000 220,000 500,000Requirements:1. Present the computation for “gain or loss on…In 2020, Liyue Corp. operate business in the motor industry and has 3 main divisions, Engine, Motor accessory and Motor Dealership.Because of the overwhelming business activities booming in the engine and motor dealership divisions Liyue decided to sell its lowest earning division, the Accessories division. In a sales commitment to be executed on March 1, 2021, the provisions made it so that the division qualified under the classification “Discontinued operations” as of the end of year 2020.The following information pertains to the two cash generating units of Liyue Corp. on December 31, 2020:Engine segmentAccessories segmentMotor DealershipTotal assets 8,000,000 4,500,000 18,500,000Total liabilities 3,000,000 2,200,000 9,600,000Fair value less cost to dispose 1,800,000Sales 8,000,000 3,200,000 11,000,000Cost of sales 3,500,000 1,200,000 7,250,000Expenses 1,000,000 700,000 3,000,000Income tax 500,000 220,000 500,00
- REQUIRED:12. Compute the total benefit under the termination plan.Helen Company's directors decided on November 1, 2011 to restructure the entity's operations as follows: Factory A would be closed down and put on the market for sale. Employees working in Factory A would be retrenched on November 30, 2011, and would be paid their accumulated entitlements plus six months' wages. Some employees working in Factory A would be transferred to Factory B, which would continue operating. On December 31, 2011, the following transactions and events had occurred: The retrenched employees have left and their accumulated entitlements have been paid. However, an amount of P1,000,000, representing a portion of the six months' wages for the retrenched employees, has still not been paid. Costs of P300,000 are expected to be incurred in transferring the remaining employees to their new work in Factory B. The transfer is planned for January 15, 2012. One employee, Juan Cruz, remains in order to complete administrative tasks relating to the closure of Factory A and the…At a board meeting in June 2020, Yes Co's directors made the decision to close down one of its factories by 30 September 2020 and market both the building and the plant for sale. The decision had been made public, was communicated to all affected parties and was fully implemented by 30 September 2020.The directors of Yes Co have provided the following information relating to the closure: Of the factory's 250 employees, 5o will be retrained and deployed to other subsidiaries within the Yes group during the year ended 30 September 2020 at a cost of P125,00o. • The remainder accepted redundancy at an average cost of P5,000 each. The factory's plant had a carrying amount of P2.2 million, but is only expected to sell for P500,000, incurring P50,000 of selling costs. The factory itself is expected to sell for a profit of P1.2 million. • The company also leased a number of machines in the factory which have an average of three years to run after 3o September 2020. The present value of these…
- Fusion Metals Company is considering the elimination of its Packaging Department. Management has received an offer from an outside firm to supply all Fusion’s packaging needs. To help her in making the decision, Fusion’s president has asked the controller for an analysis of the cost of running Fusion’s Packaging Department. Included in that analysis is $9,100 of rent, which represents the Packaging Department’s allocation of the rent on Fusion’s factory building. If the Packaging Department is eliminated,the space it used will be converted to storage space. Currently Fusion rents storage space in a nearby warehouse for $11,000 per year. The warehouse rental would no longer be necessary if the Packaging Department were eliminated. Required:1. Discuss each of the figures given in the exercise with regard to its relevance in the departmentclosing decision.2. What type of cost is the $11,000 warehouse rental, from the viewpoint of the costs of the Packaging Department?Pollenti Company has just merged with another industrial firm whose business had been failing. Pollenti immediately conducted a thorough study of the new company's work processes, and produced a report including the data shown below: •A new inspection process is recommended to minimize defective raw materials. It would cost $12,000 to implement. •Shoddy business practices are resulting in excessive warranty costs?$15,000 more than normal due mainly to material failure. •Reengineering of the assembly line will increase productivity. It would cost $18,000 to implement. •Inefficient workplace design is costing $5,000 in unnecessary rework costs. •Estimated amount of lost profits due to dissatisfied customers who turn to the competition is $80,000. Based on the above, what is the amount of appraisal costs, if any, included here? A) $18,000 B) $12,000 C) $15,000 D) ZeroThe management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below: Sales Variable expenses Fixed manufacturing expenses Fixed selling and administrative expenses All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $179,000 of the fixed manufacturing expenses and $155,200 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued. Required: What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped? Net operating income (loss) would $ 745,000 $ 387,000 $ 253,400 $216,200 decline increase by if product B90D were dropped. Therefore, the product dropped