If the $8760000 in the investment in the heavy machinery division is sold off and redeployed in the medical supllies subsidiary at the same rate of return on assets currently achieved in the the medical supplies division, what will be the new return on assets for the entire corporation?
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If the $8760000 in the investment in the heavy machinery division is sold off and redeployed in the medical supllies subsidiary at the same rate of
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- Any one of these different product lines can be produced by Bubble Mills, Inc., with the present equipment in one of the divisions. The annual depreciation of the equipment is P6,400; and the annual cost to operate the equipment, regardless of product line manufactured, is P4,600.Product A is expected to yield sales revenue of P71,000 a year with increased costs of production amounting to P42,000. Product B should yield sales revenue of P46,000 a year with increased costs of P15,000. Product C should yield sales revenue of P117,000 with increased costs of P96,000.How much is the sunk costs of the company?Any one of these different product lines can be produced by Bubble Mills, Inc., with the present equipment in one of the divisions. The annual depreciation of the equipment is P6,400; and the annual cost to operate the equipment, regardless of product line manufactured, is P4,600.Product A is expected to yield sales revenue of P71,000 a year with increased costs of production amounting to P42,000. Product B should yield sales revenue of P46,000 a year with increased costs of P15,000. Product C should yield sales revenue of P117,000 with increased costs of P96,000.How much is the sunk costs of the company? choices: P19,600 • P26,000 • P21,400 • P11,000Gandaph Corporation purchased a division five years ago for $ 3 million. The division has been identified as a reporting unit that is cash-generating under IFRS. Management is reviewing the division for impairment of goodwill and has estimated the fair value of the reporting unit to be $ 3.28 million and the unit’s value in use to be $ 3.45 million. In addition, there would be $ 85,000 in direct costs should the company decide to sell. The carrying amounts of the division’s net assets, including the associated goodwill of $ 1,450,000, are listed below. Carrying Amount of Net Assets Including Goodwill Cash $ 300,000 Receivables 450,000 Inventory 1,050,000 Property, plant, and equipment (net) 1,200,000 Goodwill 1,450,000 Less: Accounts and notes payable (750,000) Net assets, at carrying amounts $ 3,700,000 Required: Determine if goodwill is impaired and provide the related journal entries, if any, under both ASPE and IFRS.
- For each of the following issues determine whether the item should be Capitalised as an intangible Expensed to the Statement of Profit or Loss (Income Statement) £200,000 spent on developing a new process that will not bring in new revenue, but will deliver cost savings £800,000 spent on developing a new product. A competitor has already brought a similar product to the market. The directors are uncertain if they will commit any further funds. £500,000 spent on marketing a new product. This has led to increased sales of £1 million £750,000 has been spent on developing a new product. The future benefits have been estimated at £500,000.Alshamsi Ltd is a manufacturer of machine equipment product. The senior management has proposed to invest in a newmanufacturing plant that would aid in revolutionizing the machine equipment manufacturing process, and also thecompany’s products. A consultant has been engaged by the company, and has provided the following information: New equipment if purchased will cost $25,112,0 Old equipment–currently planned to be sold for $2,500,000 in four years – could be sold immediately for asalvage value of $5,250,00 If the new equipment is purchased, then this will increase the level of inventory immediately by $3,500,000, accounts receivable will increase by $1,444,500 and accounts payable increase by $3,500,000. The new equipment is estimated to have a useful life of four years and will depreciated using straight-linedepreciati At the end of four years, it is estimated that the salvage value on the new equipment will be$5,850,000. The cost of capital of the company is…The Singer Division of Patio Enterprises currently earns $2.34 million and has divisional assets of $19.5 million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost of $3,375,000 and will have a yearly cash flow of $840,000. The asset will be depreciated using the straight-line method over a six-year life and is expected to have no salvage value. Divisional performance is measured using ROI with beginning-of-year net book values in the denominator. The company’s cost of capital is 9 percent. Ignore taxes. The division manager learns that he has the option to lease the asset on a year-to-year lease for $740,000 per year. All depreciation and other tax benefits would accrue to the lessor. Required: a. What is the division's residual income before considering the project? b. What is the division's residual income if the asset is purchased? c. What is the division's residual income if the asset is leased?
- Last Resort Industries Inc. is a privately held diversified company with five separate divisions organized as investment centers. A condensed income statement for the Specialty Products Division for the past year, assuming no support department allocations, along with asset information is as follows: The manager of the Specialty Products Division was recently presented with the opportunity to add an additional product line, which would require invested assets of 14,400,000. A projected income statement for the new product line is as follows: The Specialty Products Division currently has 27,000,000 in invested assets, and Last Resort Industries Inc.s overall return on investment, including all divisions, is 10%. Each division manager is evaluated on the basis of divisional return on investment. A bonus is paid, in 8,000 increments, for each whole percentage point that the divisions return on investment exceeds the company average. The president is concerned that the manager of the Specialty Products Division rejected the addition of the new product line, even though all estimates indicated that the product line would be profitable and would increase overall company income. You have been asked to analyze the possible reasons the Specialty Products Division manager rejected the new product line. a. Determine the return on investment for the Specialty Products Division for the past year. b. Determine the Specialty Products Division managers bonus for the past year. c. Determine the estimated return on investment for the new product line. Round percentages to one decimal place and the investment turnover to two decimal places. d. Why might the manager of the Specialty Products Division decide to reject the new product line? Support your answer by determining the projected return on investment for 20Y6, assuming that the new product line was launched in the Specialty Products Division and 20Y6 actual operating results were similar to those of 20Y5. e. Suggest an alternative performance measure for motivating division managers to accept new investment opportunities that would increase the overall company income and return on investment.The Singer Division of Patio Enterprises currently earns $3.48 million and has divisional assets of $24 million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost of $3,465,000 and will have a yearly cash flow of $862,500. The asset will be depreciated using the straight-line method over a six-year life and is expected to have no salvage value. Divisional performance is measured using ROI with beginning-of-year net book values in the denominator. The company’s cost of capital is 11 percent. Ignore taxes. The division manager learns that he has the option to lease the asset on a year-to-year lease for $755,000 per year. All depreciation and other tax benefits would accrue to the lessor. Required: a. What is the division's residual income before considering the project? b. What is the division's residual income if the asset is purchased? c. What is the division's residual income if the asset is leased? (Enter your…A division is considering the acquisition of a new asset that will cost $730,000 and have a cash flow of $281,000 per year for each of the four years of its life. Depreciation is computed on a straight-line basis with no salvage value. Ignore taxes. a. What is the ROI for each year of the asset's life if the division uses beginning-of-year asset balances and net book value for the computation?