- This topic has 3 replies, 2 voices, and was last updated 5 years ago by John Moffat.
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- May 10, 2018 at 11:59 am #451047
Hello Tutor, i have an enquiry about the question 5 of Sep/Dec 2015 past year question, Cardale Industial Metal(CIM).
The answer for the total assets is minus out the trade payable even though the explanation said that “the current liability figure have been taken into account in the calculation because of the fact the managet have full control”Is it still need to minus out the trade payable even though the managet have control over it?
Hope I can get an explanation from you, much appreciate it 🙂May 10, 2018 at 6:12 pm #451093The whole point about the way we measure the performance of division managers is to measure them on things that they control.
The first paragraph makes it clear that they control all the assets and control the current liabilities, and so they are all taken into account when measuring performance.
May 11, 2018 at 5:16 am #451159Is it the trade payable is part of current liability of the company? Why the answer is minus out the yrade payable figure? Is it because it is finding net asset? (total asset minus current liability)
May 11, 2018 at 6:52 am #451171Yes – we need controllable net assets, which is controllable assets less controllable liabilities.
The question says that the non-current assets and the current assets are controllable. The trade payable are controllable, and trade payables are a current liability. - AuthorPosts
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