Marco Ltd operates a number of divisions, but the board of directors has been considering closing those
Question:
Marco Ltd operates a number of divisions, but the board of directors has been considering closing those that no longer fit into the future plans of the company. On 30 November 2015 (year-end is 31 December 2015), the board decided to close two of the divisions (Division A and Division B), make the employees redundant and to realize the assets of the divisions as quickly as possible. A detailed plan for closing down Division A was published by the board on 12 December 2015, letters were sent to customers and suppliers informing them of the closure and redundancy notices were posted to employees. In the case of Division B, although a detailed plan of closure had been agreed by the board on 30 November 2015, no action had been taken to effect the closure of the division and no notifications had been sent to business associates and employees.
You are auditor of Marco Ltd. How would you expect these matters to be accounted for, and how would you audit any estimate of the amount of the obligation, if any?
Fundamental Accounting
ISBN: 9781485112112
7th Edition
Authors: David Flynn, Carolina Koornhof, Ronald Arendse, Anna C. E. Coetzee, Edwardo Muriro, Louise Christel Posthumus, Louise Mancy Smit