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- During the year to 30 September 20X6 price plc carried out a major reorganisation of its activities as follows: (a) The only remaining manufacturing division of the company was closed down on 1 June 20X6. As a result of the closure Price's only activity will be in retail. (b) Owing to fierce the competition, on 31 August 20X6 it was decided to sell the only division that operated in Europe. The company was confident of a sale within the year. The sale actually took place on 20 January 20X7. (c) The activities carried on by the research division were terminated during the period. This division was one of a number of smaller ones which operated from the same location as the main headquarters of Price. All these division use the same central accounting system and operating costs are allocated between them for the purpose of the management accouts. The accounts for the year ended 30 September 20X6 were approved on 5 January 20X7. Discuss how these events should be accounted for in the…In the note 17 to financial statements “Realignment costs”, the following information isprovided (annual report 2019): “In January 2017, our Company initiated a major organizational realignment (The Realignment)intended to put more responsibility, accountability and resources in the hands of local businessunits of the Company’s o as to fully leverage the local capabilities our system. (…) Therealignment expenses included costs associated with involuntary terminations, voluntaryretirements and other direct costs associated with implementing the Realignment. Other directcosts included repatriating and relocating employees to local markets; asset write- downs; leasecancellation costs; and costs associated with the development, communication andadministration of the Realignment. We recorded total Realignment charges in 2017 of $850million, which was included in the caption Other Operating Charges”.In the note 17 “Streamlining Costs” (Annual report 2020), the following information…21. The following information pertains to the Chicken Wings Company and its divisions for the year ended December 31, 2020: • Sales to unaffiliated customers- P10,000,000 • Inter-segment sales of products similar to those sold to unaffiliated customers- P2,000,000 • Interest expense- P60,000 White has a reportable segment if that segment’s revenue is
- Effect of proposals on divisional performance A condensed income statement for the Jet Ski Division of Amazing Rides Inc. for the year ended December 31. 20Y2, is as follows Assume that the Jet Ski Division received no charges from service departments. The president of Amazing Rides has indicated that the division's rate of return on a $15,000,000 investment must be increased to at least 12% by the end of the next year if operations are to continue. The division manager is considering the following three proposals Proposal 1: Transfer equipment with a book value of J3.000.000 to other divisions at no gain or loss and lease similar equipment. The annual lease payments would exceed the amount of depreciation expense on the old equipment by $264,000. This increase in expense would be included as part of the cost of goods sold. Sales would remain unchanged. Proposal 2: Purchase new and more efficient machining equipment and thereby reduce the cost of goods sold by $480,000. Sales would remain unchanged, and the old equipment, which has no remaining book value, would be scrapped at no gain or loss. The new equipment would increase invested assets by an additional $1,000,000 for the year. Proposal 5? Reduce invested assets by discontinuing the tandem jet ski line. This action would eliminate sales of $2,280,000, cost of goods sold of $1,400,000, and operating expenses of $463,600. Assets of $4,200,000 would be transferred to other divisions at no gain or loss. Instructions Which of the three proposals would meet the required 12% return on investment?'John Mendenhall, CEO of News Report Group, is considering a proposal to base division executive compensation on division RI. a. Compute the 2017 RI of each division33. Seedoy plc's manufacturing division sells all its production to the distribution division, which then sells it externally. Which of the following is most likely to present a problem between the two divisions Agreeing on how authority is delegated within each division Agreeing on how resposibility for production is split between the divisions Agreeing on how resposibility for marketing is split between the divisions Agreeing on a fair transfer price between the divisions. 34. Prestwich Ltd's directors have continued to trade after the point where they should have concluded that insolvent liquidation of the company was inevitable The directors have engaged in market abuse wrongful trading fraudulent trading insider dealing