19. The board of directors of Chestnut Inc. approved a restructuring plan on November 1, Year 1. On December 1, Year 1, Chestnutpublicly announced its plan to close a manufacturing division in New Jersey and move it to China and the company's New Jerseyemployees were notified that their jobs would be eliminated. Also on December 1, Year 1, to ensure an orderly transition,management promised a termination bonus of $10,000 to any employee who remains with the company until his or her positionis terminated in the fourth quarter of Year 2. Chestnut estimates it will pay termination bonuses to 120 employees atPage 203the end of Year 2, for a total of $1,200,000. The present value of the estimated termination bonus is $1,000,000.Required:Determine the provision that should be recognized for Chestnut's restructuring plan. Identify the dates on whichjournal entries should be made and the amounts to be recorded.

Corporate Restructructuring: A corporate restructuring is an activity performed by a company to…

Answered: 19. The board of directors of Chestnut…

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter2: Business Ethics And Social Responsibility

Section: Chapter Questions

Problem 10QAP

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D. At the beginning of current year, Zamba Company announced the decision to close the factory located in Zamboanga and terminate all 150 employees as a result of economic downturn. The entity shall pay P30,000 per employee upon termination. However, to ensure that the windup of the factory occurs smoothly and all remaining customer orders are completed, the entity needs to retain some employees until closure of the factory in nine months. As a result, the entity announced that employees who agree to stay until the closing of the factory shall receive P80,000 payment at the end of nine months in addition to receiving their current wage throughout the period of closure instead of the P30,000. Based on this offer, the entity expected to retain 20 employees until the factory is closed. REQUIRED: Compute the total benefit under the termination plan, the amount of termination benefit and the amount of short-term benefit.
C. An entity is committed to close a factory in 10 months and shall terminate the employment of all theremaining employees of the factory. Under the termination plan, an employee leaving before closure offactory shall receive on termination date a cash payment of P20,000. However, an employee that rendersservice until closure of the factory shall receive P60,000. There are 120 employees at the factory. The entityexpects 100 employees to leave before closure and 20 employees to render service until closure. REQUIRED:10. What amount should be recognized as termination benefit?
C. An entity is committed to close a factory in 10 months and shall terminate the employment of all theremaining employees of the factory. Under the termination plan, an employee leaving before closure offactory shall receive on termination date a cash payment of P20,000. However, an employee that rendersservice until closure of the factory shall receive P60,000. There are 120 employees at the factory. The entityexpects 100 employees to leave before closure and 20 employees to render service until closure. REQUIRED:11. What amount should be recognized as short-term benefit?
The entity shall pay P20,000 per employee upon termination. Problem 19-16 (IFRS) terminate all 200 employees as a result of economic downturn a decision to close a factory located in Mindanao and At the beginning of current year, Oro Company announced ae However, to ensure that the windup of the factory occu-n smoothly and all pemaining customer orders are complete the entity needs to retain at least 20% of employees un closure of the factory in eight months. As a result, the entity announced that employees who agree to stay until the closing of the factory shall receive P60,000 payment at the end of eight months in addition to receiving their current wage throughout the period of closure instead of the P20,000. Based on this offer, the entity expected to retain 50 employees until the factory is closed. 1. What is the total benefit under the termination plan? a. 6,000,000 b. 3,000,000 c. 4,000,000 d. 8,000,000 2. What is the termination benefit? a. 4,000,000 b. 3,000,000 c. 6,000,000…
Donovan Ramsey, the Chief Financial Officer of LevelUp Business Consulting, has advised you that the company is considering closing its Calgary, Alberta office at the beginning of the next calendar year and transitioning the staff of that location to permanent work from home employees. The employees home offices would not be considered a permanent establishment of the employer. Eight staff members currently report to the Alberta office, and the total payroll is $775,000.00. The organization’s head office and payroll department are in Mississauga, Ontario. The current Ontario payroll is $4,750,000.00. You have been asked to prepare an analysis showing how closing this permanent establishment in Alberta will impact the employee’s coverage for provincial healthcare and the organization’s payroll expense for provincial health taxes. Be specific in your analysis by providing a comparison of current versus projected costs that may result from this change.
The entity shall pay P20,000 per employee upon termination. payment at the end of eight months in addition to receiving terminate all 200 employees as a result of economic downturn. the entity needs to retain at least 20% of employees until to stay until the closing of the factory shall receive P60,000 smoothly and all remaining customer orders are completed, However, to ensure that the windup of the factory occurs As a result, the entity announced that employees who agree 3. What is the short-term employee benefit? Problem 19-16 (IFRS) and closure of the factory in eight months. As a result, the entity announced that employees who o to stay until the closing of the factory shall receive P6000 payment at the end of eight months in addition to receiri their current wage throughout the period of closure insteai of the P20,000. Based on this offer, the entity expected to retain 50 employees until the factory is closed. 1. What is the total benefit under the termination plan? a. 6,000,000…
Norma Smith is the controller of Baylor Corporation and is responsible for the preparation of the year-end financial statements. The following transactions occurred during the year. a. On December 20, 2020, a former employee filed a legal action against Baylor for $100,000 for wrongful dismissal. Management believes the action to be frivolous and without merit. The likelihood of payment to the employee is remote. b. Bonuses to key employees based on net income for 2020 are estimated to be $150,000. c. On December 1, 2020, the company borrowed $600,000 at 8% per year. Interest is paid quarterly. d. Accounts receivable at December 31, 2020, is $10,000,000. An aging analysis indicates that Baylor’s expense provision for doubtful accounts is estimated to be 3% of the receivables balance. e. On December 15, 2020, the company declared a $2.00 per share dividend on the 40,000 shares of common stock outstanding, to be paid on January 5, 2021. f. During the year, customer…
Amazing Company enjoys a profitable operation for its past ten years of existence. The company president proposed to the Board of Directors an incentive compensation plan where the general managers would be entitled to a year-end bonus, to be paid on January 15 of the following year, under the following schemes based on their department performance: General Manager 1 – 3% bonus based on profit before bonus and income tax in excess of P5,000,000. General Manager 2 – 2% bonus based on profit after both bonus and income tax. General Manager 3 – 1% bonus based on profit after bonus but before income tax. The company’s profit before bonus and income tax for the year ended December 31, 2021 is P8,000,000. The income tax rate is 25%.How much is the total liability related to the above transactions to be reported on December 31, 2021?
Western Manufacturing is involved with several potential contingent liabilities. Your assignment is to draft the appropriate accounting treatment for each situation described below. Western’s fiscal year-end is December 31, 2021, and the financial statements will be issued in early February 2022.a. During 2021, Western experienced labor disputes at three of its plants. Management hopes an agreement will soon be reached. However, negotiations between the company and the unions have not produced an acceptable settlement, and employee strikes are currently under way. It is virtually certain that material costs will be incurred, but the amount of possible costs cannot be reasonably estimated.b. Western warrants most products it sells against defects in materials and workmanship for a period of a year. Based on its experience with previous product introductions, warranty costs are expected to approximate 2% of sales. A new product introduced in 2021 had sales of $2 million, and actual…
Martinez, Inc. is a furniture manufacturing company with 50 employees. Recently, after a long negotiation with the local labor union, the company decided to initiate a pension plan as a part of its compensation plan. The plan will start on January 1, 2020. Each employee covered by the plan is entitled to a pension payment each year after retirement. As required by accounting standards, the controller of the company needs to report the pension obligation (liability). On the basis of a discussion with the supervisor of the Personnel Department and an actuary from an insurance company, the controller develops the following information related to the pension plan. Average length of time to retirement 15 years Expected life duration after retirement 10 years Total pension payment expected each year after retirement for all employees. Payment made at the end of the year. $847,700 per year The interest rate to be used is 10%. Click here to view factor tables On the basis of the information…
Paul Howard, the new plant manager of Garden Scapes Manufacturing Plant Number 7, has just reviewed a draft of his year-end financial statements. Howard receives a year-end bonus of 11.5% of the plant’s operating income before tax. The year-end income statement provided by the plant’s controller was disappointing to say the least. After reviewing the numbers, Howard demanded that his controller go back and “work the numbers” again. Howard insisted that if he didn’t see a better operating income number the next time around he would be forced to look for a new controller. Garden Scapes Manufacturing classifies all costs directly related to the manufacturing of its product as product costs. These costs are inventoried and later expensed as costs of goods sold when the product is sold. All other expenses, including finished-goods warehousing costs of $3,640,000, are classified as period expenses. Howard had suggested that warehousing costs be included as product costs because they are…
At the beginning of 20x1, a company announced a sabbatical plan for senior executives.After 9 years of consecutive service, those eligible will be allowed 3 months off at 90%of their salary. Three executives currently earning $250,000 each (measured at the end of20x1) are eligible for the sabbatical plan. It is expected that two will earn the sabbaticalleave (the other is expected to leave the company before the 9 years’ service requirement).Salary increases are expected to average 3% per year (i.e. their salary for 20x2 will be$250,000 x 1.03 = 257,500). No entries were made for this plan yet. Any servicecomponent of the sabbatical plan should be debited to administrative expenses.Required – Assuming the yield on high quality corporate bonds is 4%, prepare the journalentry related to this sabbatical plan at December 31, 20x1

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