Sell Soon Inc - 1144 Words

Case (Project Sell Soon Inc) Sell Soon Inc. This case is about a company called Sell Soon Inc. this is a manufacturing company that operates two widget manufacturing facilities in the United States. One is located in New Orleans Louisiana and the other facility is located in Houston Texas. The company is going through restructuring and one part of the restructuring plan is the disposition of the Houston division through consolidation. When the restructuring is complete all of the Sell Soon Ink’s manufacturing will be done from the New Orleans facility. The Houston facility currently has a book value of $ 20 million and it has a fair market value of $ 25 million. Sell Soon Inc expects to incur two million dollars to dispose the†¦show more content†¦Furthermore, we are told there is a gain expected due to this disposal. In such a case, a company usually records the cost of this transaction at fair market value this includes all the expenses incurred to prepare the Houston manufacturing facili ty ready for sale. These expenses include cleanup cost of the facility, removal of dangerous (hazardous) chemicals and the safe disposal of these chemicals (according to Environmental Protection Agency guide lines) the removal of debris and trash and all other costs to get the facility up to par. Since the company expects to gain on this disposal according to Generally Accepted Accounting Principles the gain on this disposal has to be recognized immediately. In addition, Sell Soon Inc wants to consolidate its business that means all their production will be taking place from the New Orleans facility, based on FASB statement No. 141 all the financial reporting for Sell Soon Inc. is done using the purchase method of reporting. If after a period of time Sell Soon Inc could not or decides not sell the Houston facility, then it could dispose of the asset by other means, situations include: abandonment, exchange for similar productive asset or distribution to owners in a spin off. In such a case, the asset will be classified as â€Å"held and used† instead of â€Å"held for Sale† until it is disposed of by Sell Soon Inc. The Houston facility stays in property plant and equipment and depreciation estimates will be revisedShow MoreRelatedMichael Saul Dell : Business Man And Entrepreneur1087 Words   |  5 Pagesbecome right now but now the only difference with then and now he has well experienced and experts in their particular industry. 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