Diva Footwear Is Contemplating If It Should Continue Producing Platform

question 57

Multiple Choice

Diva Footwear is contemplating if it should continue producing platform shoes. The following information is available for the company's segments. $\begin{array}{lrrr}&\text { Platform Shoes}&\text { Athletic Shoes}&\text { Boots }\\\hline\text { Sales } & \$ 120,000 & \$ 420,000 & \$ 360,000 \\\text { Variable costs } & 64,000 & 220,000 & 140,000\\\text { Contribution margin } & 56,000 & 200,000 & 220,000 \\\text { Direct fixed costs } & 45,000 & 70,000 & 90,000 \\\text { Allocated fixed costs } & 20,000 & 70,000 & 60,000\\\text { Net income }&(\$9,000) &\$60,000&\$70,000\end{array}$ If platform shoes are dropped, what effect will occur to Diva Footwear's net income?

• A) Increase by $9,000
• B) Decrease by $56,000
• C) Decrease by $11,000
• D) Increase by $56,000

Grasp the determination of acquirer and acquiree in business combinations and the implications for financial reporting.

Understand the legal and strategic defense mechanisms against hostile takeovers.

Know the requirements and considerations for identifying control in business combinations under IFRS.

Understand and apply the accounting treatment for both the acquisition of shares and the acquisition of net assets in business combinations.

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Definitions:

Umbilical Cord

The flexible cordlike structure connecting a fetus to the placenta, delivering nutrients and oxygen and removing waste.

Psychological Closeness

The perception of being emotionally intimate or connected with another person or group.

Intimacy

A tight, intimate bond that is typically affectionate or tender, formed between individuals or within a group.

Erikson

An American developmental psychologist known for his theory on psychosocial development of human beings.