International Accounting
5th Edition
ISBN: 9781260466492
Author: Doupnik, Timothy
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 5, Problem 28Q
A cement manufacturer has cement plants around the world and decides to sell one of the plants within the next 12 months. Would this cement plant be classified as a discontinued operation in the current period’s financial statements?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Anderson Nuclear Power Plant will be “mothballed” at the end of its useful life (approximately 20 years) at great expense. The expense recognition principle requires that expenses be recognized as assets are used up or liabilities are incurred. Accountants Ana Alicia and Ed Bradley argue whether it is better to allocate the expense of mothballing over the next 20 years or ignore it until mothballing occurs.
Instructions
Answer the following questions.
a. What stakeholders should be considered?
b. What ethical issue, if any, underlies the dispute?
c. What alternatives should be considered?
d. Assess the consequences of the alternatives.
e. What decision would you recommend?
Due to recent acquisition, Adaro Co Ltd plans to close a factory in 10 months and, at that time, terminate employment of all of the remaining employees at the factory. Because Adaro Co Ltd needs the expertise of the employees at the factory to complete some contracts, it announce a plan of termination as follows.
Each employee who stand and renders service until the closure of the factory will receive on the termination date a cash payment of CU 50,000, employees leaving before the closure of the factory will receive CU 20,000.There are 1,200 employees at the factory . At the time of the announcing the plan, Adaro Co Ltd expects 200 of them to leave before the closureRequired :Determine the amount of termination benefits and short term employee benefit in accordance with IAS 19 ?
ProWasher’s lawyer, Anna Turney, informed you that ProWasher has a legal obligation to dismantle and remove the equipment used to produce the dishwashers and clean up the rental premises as part of the lease agreement. The equipment, costing $10 million, was put into production on June 1, 2023 and has a useful life of 120 months. The dismantling and removal costs are estimated to be $3 million.
What is the accountant supposed to do?
Chapter 5 Solutions
International Accounting
Ch. 5 - Prob. 1QCh. 5 - Prob. 2QCh. 5 - 3. What is a constructive obligation?
Ch. 5 - Prob. 4QCh. 5 - Prob. 5QCh. 5 - Prob. 6QCh. 5 - Prob. 7QCh. 5 - Prob. 8QCh. 5 - Prob. 9QCh. 5 - Prob. 10Q
Ch. 5 - 11. What are the rules related to the recognition...Ch. 5 - Prob. 12QCh. 5 - Prob. 13QCh. 5 - What are the five steps that entities take to...Ch. 5 - Prob. 15QCh. 5 - Prob. 16QCh. 5 - Prob. 17QCh. 5 - What is breakage revenue?Ch. 5 - What are the three categories of financial assets...Ch. 5 - Prob. 20QCh. 5 - Prob. 21QCh. 5 - What is the primary difference between how IFRS...Ch. 5 - Prob. 23QCh. 5 - Prob. 24QCh. 5 - Prob. 25QCh. 5 - Prob. 26QCh. 5 - Prob. 27QCh. 5 - A cement manufacturer has cement plants around the...Ch. 5 - Prob. 29QCh. 5 - How much revenue must be generated by a companys...Ch. 5 - How is a major customer defined?Ch. 5 - 1. Halifax Corporation has a December 31 fiscal...Ch. 5 - 2. Bull Arm Company has the following items at...Ch. 5 - 3. Melbourne Inc. became involved in a tax dispute...Ch. 5 - Prob. 4EPCh. 5 - Prob. 5EPCh. 5 - Prob. 6EPCh. 5 - Prob. 7EPCh. 5 - 8. Sandoval Company operates in a country in which...Ch. 5 - Which of the following is a criterion that must be...Ch. 5 - Prob. 10EPCh. 5 - Siam Financial Corp. (SFC) actively trades bonds...Ch. 5 - A 3 million loan paying annual interest at a 5...Ch. 5 - Monterrey Properties enters into a 3-year lease...Ch. 5 - 10. An entity must adjust its financial statements...Ch. 5 - Prob. 15EPCh. 5 - Prob. 16EPCh. 5 - Prob. 17EPCh. 5 - Prob. 18EPCh. 5 - Prob. 19EPCh. 5 - Prob. 20EPCh. 5 - Prob. 21EPCh. 5 - Prob. 22EPCh. 5 - Prob. 23EPCh. 5 - Prob. 24EPCh. 5 - Prob. 25EPCh. 5 - Prob. 26EPCh. 5 - Prob. 27EPCh. 5 - Prob. 28EPCh. 5 - Prob. 29EPCh. 5 - Prob. 30EPCh. 5 - Prob. 33EPCh. 5 - Prob. 34EPCh. 5 - Prob. 35EPCh. 5 - Prob. 36EPCh. 5 - Prob. 37EPCh. 5 - Prob. 38EPCh. 5 - On January 1, Year 1, Autonomous Systems Ltd....Ch. 5 - Prob. 40EPCh. 5 - Prob. 41EPCh. 5 - Prob. 42EP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Your firm spends $600,000 per year (end of the year payment) in regular maintenance of its equipment. Due to the COVID-19 economic downturn, the firm considers forgoing these maintenance expenses for the next three years. If it does so, it expects it will need to spend $2.7 million in year 4 (end of the year payment) replacing failed equipment. Can IRR be applied in this decision? Answer For what MARR is forgoing maintenance a good decision?arrow_forwardThe plant manager asked you to do a cost analysis to determine when currently owned equipment should be replaced. The manager stated that under no circumstances will the existing equipment be retained longer than two more years It can be replaced any year with an outside contractor at a cost of $97,000 per year. The market value of the currently owned equipment is estimated to be $37,000 now, $30,000 in one year, and $19,000 two yearsfrom now. The operating cost is $85,000 per year. Using an interest rate of 10% per year, determine when the defending equipment should be retired.arrow_forwardA company needs to have a working machine during each of the next six years. Currently, it has a new machine. At the beginning of each year, the company may keep the machine or sell it and buy a new one. A machine cannot be kept for more than three years. A new machine costs $5,000. The revenues earned by a machine, the cost of maintaining it, and the salvage value that can be obtained by selling it at the end of a year depend on the age of the machine (see Table 21). Use dynamic programming to maximize the net profit eamed during the next six years. TABLE 21 Age of Machine at Beginning of Year 0 Vear 1Year 2 Years Revenues (5) 4,500 3,000 1500 Operating Costs (S) 500 700 1,100 Salvage Value at End of Year (5) | 3,000 1,800 500arrow_forward
- Chesterfield Constructions Ltd owns a crane which is used based on contract for many construction projects. The entity purchased the crane in April 2015 at a cost of $2,200,000. The manager estimates that the crane will work on average for 250 days each year for 10 years and then it would be sold at an estimated residual price of $200,000. By 30 June 2020 the crane had worked for 1,200 days.In July 2020 the motor of the crane started to shudder and lose power. An assessment of the crane’s motor resulted in repairs that were required to maintain the motor at its normal efficiency. The cost of $6,000 comprised labour of $4,000 and replacement parts of $2,000. The repairs were completed by the end of July 2020. The management decided that the cost would be regarded as a capital cost. At the same time management estimated that the crane would now be used for a total of 3,000 days with an estimated residual value of $90,000. In the remainder of the financial year to 2021 the crane worked…arrow_forwardYour firm spends $474,000 per year in regular maintenance of its equipment. Due to the economic downturn, the firm considers forgoing these maintenance expenses for the next 3 years. If it does so, it expects it will need to spend $1.8 million in year 4 replacing failed equipment. a. What is the IRR of the decision to forgo maintenance of the equipment? b. Does the IRR rule work for this decision? c. For what costs of capital (COC) is forgoing maintenance a good decision? a. What is the IRR of the decision to forgo maintenance of the equipment? The IRR of the decision is _________________ (Round to two decimal places.)arrow_forwardSuppose you are an investment advisor and are looking at two companies to recommend to your clients, Blue Orchid Enterprises and Fast Track Systems. The two companies are virtually identical, and both have been in operation for one year. In early January 2020, both companies purchased equipment costing $183,000, with a 10-year estimated useful life and a $10,000 residual value. Blue Orchid uses the straight-line depreciation method. Fast Track uses the double- declining-balance method. Both companies' trial balances at December 31, 2020, included the following: Net Sales Revenue $ 870,000 Cost of Goods Sold 410,000 Operating Expenses (other than depreciation) 200,000 Requirements 1. Prepare both companies' income statements using their desired method of depreciation. You must show both income statements. 2. Write a letter to address the following questions for your clients: Which company appears to be more profitable? Which company would you prefer to invest in? Why? Is one method of…arrow_forward
- Your firm spends $447,000 per year in regular maintenance of its equipment. Due to the economic downturn, the firm considers forgoing these maintenance expenses for the next 3 years. If it does so, it expects it will need to spend $1.9 million in year 4 replacing failed equipment. a. What is the IRR of the decision to forgo maintenance of the equipment? b. Does the IRR rule work for this decision? c. For what costs of capital (COC) is forgoing maintenance a good decision?arrow_forwardYour firm spends $469,000 per year in regular maintenance of its equipment. Due to the economic downturn, the firm considers forgoing these maintenance expenses for the next 3 years. If it does so, it expects it will need to spend $2.2 million in year 4 replacing failed equipment. a. What is the IRR of the decision to forgo maintenance of the equipment? b. Does the IRR rule work for this decision? c. For what costs of capital (COC) is forgoing maintenance a good decision? a. What is the IRR of the decision to forgo maintenance of the equipment? The IRR of the decision is ☐ %. (Round to two decimal places.)arrow_forwardYour firm spends $488,000 per year in regular maintenance of its equipment. Due to the economic downturn, the firm considers forgoing these maintenance expenses for the next 3 years. If it does so, it expects it will need to spend $1.9 million in year 4 replacing failed equipment. a. What is the IRR of the decision to forgo maintenance of the equipment? b. Does the IRR rule work for this decision? c. For what costs of capital (COC) is forgoing maintenance a good decision?arrow_forward
- Your firm spends $498,000 per year in regular maintenance of its equipment. Due to the economic downturn, the firm considers forgoing these maintenance expenses for the next 3 years. If it does so, it expects it will need to spend $2.1 million in year 4 replacing failed equipment. a. What is the IRR of the decision to forgo maintenance of the equipment? b. Does the IRR rule work for this decision? c. For what costs of capital (COC) is forgoing maintenance a good decision? a. What is the IRR of the decision to forgo maintenance of the equipment? The IRR of the decision is%. (Round to two decimal places.)arrow_forwardA plant manager is not sure whether he will get the approval to buy new equipment for automating an engine assembly line now or at some future time within the next three years. In order to have the money whenever he is given the go-ahead, he has asked you to tell him what the equipment is likelyto cost in each of the next three years. The cost of the equipment today is $300,000. How much will it cost at the end of years 1, 2, and 3, if the cost increases only by the inflation rate of 4% per year? Use a market interest rate of 15% per year.arrow_forwardCari Heat (CH) Ltd. is currently faced with a critical decision regarding its production equipment. Cari Heat (CH) is evaluating two options for its production equipment: upgrading or replacing. The company manufactures and sells 7,500 heaters every year, each priced at $920. The current production equipment, which was acquired at a cost of $2,150,000, has been in use for just two years and is subject to straight-line depreciation over a five-year useful life. Furthermore, it possesses no terminal disposal value, but it can be currently sold for $650,000. The following table presents data for the two alternatives: ABC 1 Choice Upgrade Replace 2 One-time equipment costs $3,500,0003 Variable manufacturing cost per Heater $180 $90 4 Remaining useful life of equipment (years) 3 3 5 Terminal disposal value of equipment 0 0 Required 1. Prepare a schedule, for the remaining 3 years, reflecting whether CH should upgrade its production line or replace it?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Asset impairment explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=lWMDdtHF4ZU;License: Standard Youtube License