The Current Controllable Margin for Claremont Division Is $62,000

question 17

Multiple Choice

The current controllable margin for Claremont Division is $62,000.Its current operating assets are $200,000.The division is considering purchasing equipment for $60,000 that will increase annual controllable margin by an estimated $10,000.If the equipment is purchased, what will happen to the return on investment for Claremont Division?

• A)an increase of 16.1%
• B)a decrease of 13.3%
• C)a decrease of 3.3%
• D)a decrease of 7.2%

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Definitions:

AASB 11

The Australian Accounting Standards Board standard addressing the accounting for joint arrangements, requiring parties to a joint arrangement to recognize their rights and obligations.

Joint Venture

A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task, project, or any other business activity.

Contractual Agreement

A legally binding agreement between two or more parties, outlining obligations and rights.

Strategic Financial

Refers to financial decisions, planning, and activities that are aimed at achieving a company's strategic objectives.