Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Corrpro Companies, Inc., founded in 1984, provides corrosion control–related services, systems, equipment, and materials to the infrastructure, environmental, and energy markets. Corrpro’s products and services comprise (a) corrosion control engineering services, systems, and equipment, (b) coatings services, and (c) pipeline integrity and risk assessment services. The following information was abridged from the company’s March 31, 2011; Form 10-K. Assets and Liabilities Held for Sale In July 2010, the Company’s Board of Directors approved a formal business restructuring plan. The multi-year plan comprises a series of initiatives to perk up operating income and reduce debt. The Company intends to sell non-core business units and employ the proceeds to reduce debt. The Company has engaged outside professionals to help in disposition of the domestic and international non-core business units. Prior to quarter ended September 30, 2010, the Company’s non-core domestic and international units were reported as the Other Operations and International Operations reporting segments. Effective for quarter ended September 30, 2010, the Other Operations and International Operations reporting segments have been eliminated and the non-core domestic and international units are reported as discontinued operations. Prior year financial statements have been reclassified to reflect these non-core units as Discontinued operations, that are also referred to as “assets and liabilities held for sale.”

Consolidated Statements of Operations for the Years Ended March 31,

($ in 000s)                                                                              2011              2010                    2009
Revenues                                                                          $104,220          $123,058               $120,489
Operating costs and expenses
Cost of sales                                                                       71,607              87,326                    85,325
Selling, general, and administrative                                          29,788             32,327                    35,535
Operating income (loss)                                                          2,825               3,405                      (371)
Interest expense                                                                    5,907              5,055                      4,401
Loss from continuing operations
before income taxes                                                               (3,082)           (1,650)                   (4,772)
Provision (benefit) for income taxes                                          (331)            10,669                     (934)
Loss from continuing operations                                             (2,751)          (12,319)                   (3,838)
Discontinued operations
Loss from operations, net of taxes                                          (9,931)         (5,898)                     (4,443)
Gain on disposals, net of taxes                                                2,095                —                            —
Loss before cumulative effect of change in
accounting principle                                                               (10,587)          (18,217)                  (8,281)
Cumulative effect of change in
accounting principle                                                                (18,238)              —                           —
Net loss                                                                               $ (28,825)      $ (18,217)                   $ (8,281)

Required:

problem1. What criteria should be met to warrant reclassifying the non-core business units as discontinued operations effective with quarter ending September 30, 2010?

problem2. Assume that in March 2011 a buyer signed a buy commitment for Corrpro’s Rohrback Cosasco Systems division. This sale needs regulatory approval which is expected to take at least 18 months to get. Should Corrpro’s 2011 financial statements consist of this division in assets and liabilities held for sale? describe.

problem3. Suppose that in the February 2011 a potential buyer of another of domestic noncore business units insisted on a site assessment prior to signing a purchase commitment. The assessment’s purpose was to conclude whether the site was environmentally impaired. Unfortunately for Corrpro, trace amounts of a suspected carcinogen were discovered, causing the buyer to terminate the purchase. The buyer is willing to reconsider its decision if the site is remediated. While the site can be remediated using existing technology, doing so will be costly sufficient to negate the purpose of the sale, which is to increase funds to diminish debt. Management believes that employing new remediation methods currently being tested will make this sale economically feasible and thus places the sale of this business unit on hold. Should Corrpro’s 2011 financial statements comprise this division in Assets and liabilities held for sale?

problem4. Is there any purpose for management to prefer discontinued operations treatment for these noncore business units?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91159

Have any Question? 


Related Questions in Accounting Basics

Questionsq1 discuss how the sec has influence if any over

Questions: Q1: Discuss how the SEC has influence (if any) over the audit of Smackey Dog Foods, Inc. Q2: Discuss the essential activities involved in the initial planning of an audit. How do these all specifically to the ...

Managerial accounting and financial accountingcompare and

Managerial Accounting and Financial Accounting Compare and Contrast Managerial Accounting and Financial Accounting. Be sure to discuss how managerial accounting is useful for providing information for at least one of the ...

Discussion 1-iasb and fasb mergersir david tweedie chairman

Discussion 1-IASB and FASB Merger? Sir David Tweedie, chairman of the International Accounting Standards Board (IASB), is quoted as saying that the IASB and the Financial Accounting Standards Board (FASB) will eventually ...

This assignment will assess the following learning

This assignment will assess the following learning outcomes: - Demonstrate the impact on the financial statements and the implication for different users of accounts of alternative ways of treating controversial accounti ...

Additional information1 the company during the year paid

Additional Information 1. The Company during the year paid AED 200,000 for security deposit and bank charges of AED 40. 2. The Warehouse reported inventory stock count of AED 286,500. 3. XYZ Company's confirmation ,( Cus ...

Harmon helmets purchased equipment for 62000 cash sold

Harmon Helmets purchased equipment for $62,000 cash, sold equipment costing $36,000 with a book value of $22,000 at a loss, and declared dividends during 2013. No new notes payable were issued during the year. Financial ...

Problem 3-2 lo 2 simple equity method adjustments

Problem 3-2 (LO 2) Simple equity method adjustments, consolidated worksheet. On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. Solar has common stock, other paid-in capital ...

1 what is the difference between a significant deficiency

1) What is the difference between a significant deficiency and a material weakness as it relates to internal Control? How does the presence of one material deficiency affect the auditor's report on internal controls unde ...

Accounting assignmentthree personal trainers at an upscale

Accounting Assignment Three personal trainers at an upscale health spa / resort in Sedona, Arizona, want to start a health club that specializes in health plans for people in the 50+ age range. The trainers Donna Rinaldi ...

Accounting discussion questionsdq1review the provisions of

ACCOUNTING DISCUSSION QUESTIONS DQ1 Review the provisions of the Sarbanes-Oxley Act of 2002 to address the accounting scandals in the late 1990s and early 2000s (Enron, WorldCom, etc.). Identify the provisions that you b ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro