1. The president besides focuses on the information of financial accounting provided by its subsidiary. As we all know, financial accouting is usually shown to external decision-makers, who may be interested in the structure of the company s cyber pose profit, ie. main revenues and related expenses of a certain year. But prestigiousness Telephone Company , to some extent, is a part of the midland decision-makers of the Pretige Data Company. The president should pay more attentions to information that is accommodative to solve the main problem. In the Exhibt 2, expenses also contain dummy cost, which are all paid to Prestige Telephone Company . We don t think it appropriate to do so, pull in from Mr. Rowe we know that Pretige Data Company is a separate exactly wholly owned entity by Prestige Telephone Company. The space be can be regarded as a discretionary fixed costs to Prestige Telephone Company. This kind of costs can be easily reduced by the parent company. When making decisions, such costs as space costs and other payments for coperate services provided by parent company should not be taken into account.
If so, the expenses would be reduced quite a lot.
2. The reveunes stated in the financial accounting statement is establish on the different prices to the parent company($400 per hour) and commercial sales($800 per hour). However, to discerningly assess the subsidiary s present value, we d stop use the fair market value. We can suppose if Prestige Telephone Company really abandon the subsidiary, it has to pay doubly the present prices, ie. $800 per hour, for the same service to other independent companies. What s more, just as the case says, the idea behind the subsidiary is too good to give up easily. It s rational to predict that the parent company would suffer from greater losses. As we...If you want to get a full essay, order it on our website: Orderessay
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