[carpeCPA]

Hey fellow accountants, I need help answering the following two questions regarding the problem below:

1. Can you explain what you would specifically pay attention to in coordinating this divestiture?

2. What would the gain or loss be on the divestiture? (I don’t know if the $50M environmental liability and $3M cash would be considered consideration.)

Case Problem:

ZZZZZZZ Inc. is 100% owner of Company X, .Inc. and providing services to this company, including:

– Benefit plan management

– Insurance plan management (property, auto, general liability, etc.).

– Payroll

– Tax compliance

– Bank platform in a cash-pooled environment

The divestiture of Company X, Inc is signed. The purchasing company is outside the Group. We agreed on keeping liable after the deal on any environmental liabilities up to 50M.

The divestiture costs amount up to 5M, the selling price is 50M and net book value is 20M.

It has been agreed that 3M in cash were to be left in Company X hands, and that all in excess of 3M where to be dividended up to ZZZZZZZ at the closing date.

At the closing date, 9/30/2013 there is actually 4 M in hands.

All links with Company X should be cut at the very closing date, and no money should be pending to get or refund in either direction.

REG - 93 (Jul'13)
FAR - 97 (Dec '13)
AUD - 99 (May '14)
BEC - Jul '14

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