ABCXYZ Corporation, a major manufacturer company, is the largestemployer in the township of Oakwick—a...

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Accounting

ABCXYZ Corporation, a major manufacturer company, is the largestemployer in the township of Oakwick—a small, Midwestern suburbancommunity with a population of about 15,000 residents. ABCXYZemploys an estimated 2,000 people on its 63-acre campus and nearlyhalf of the employees reside in Oakwick. ABCXYZ pays approximately$200,000 in property taxes annually to Oakwick, a figure thatgenerally increases by 2% each year. These revenues collected byOakwick go directly into the general treasury with the otherproperty taxes collected by the community. Oakwick’s approvedannual balanced budget totals $16,000,000 for thisyear.
ABCXYZ announces that a state in the Southwest has provided alucrative corporate tax incentive that is too appealing to pass up,and thus it is planning to close its operations in Oakwick and moveout at year’s end. As part of its public relations campaign to helpthe environment and create recreational opportunities for youngpeople, ABCXYZ has decided to offer Oakwick the property for just$1 after ABCXYZ has razed the plant and restored in to its naturalstate. However, the community is deed-restricted toonly use this property for open space andrecreational activities. Historically, Oakwick has been indesperate need of recreational amenities for its citizens but hashad very little open space to achieve this goal.
Additional facts to consider:
1) ABCXYZ has offered the same job at the same salary to anycurrent employee who agrees to move with the company. Half of thecompany’s employees who reside in Oakwick will decide to take theoffer.
2) It will be Oakwick’s responsibility to develop the site forrecreation.
3) Should Oakwick decide against the deal, ABCXYZ has indicatedthat it would make the same offer to the county and state in whichOakwick is located.
-As the chief financial officer for the township ofOakwick, how would you dissect this offer? Consider and identifyall direct and indirect budgetary considerations (both operatingand capital expenses) that may result from this possibletransaction and ABCXYZ’s move out of Oakwick. What would be yourrecommendation to Oakwick’s elected officials?

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3.8 Ratings (584 Votes)

Fact Oakwick is a small suburban community and population is also not much more but ABCXYZ is also largest employer of township and providing almost 3040 of total employment As well ABCXYZ ltd will have to leave Oakwick anyhow because of getting tax incentives ABCXYZ is giving whole property at 1 for public charity subject to deed restricted Oakwick also See Answer

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In: AccountingABCXYZ Corporation, a major manufacturer company, is the largestemployer in the township of Oakwick—a small,...ABCXYZ Corporation, a major manufacturer company, is the largestemployer in the township of Oakwick—a small, Midwestern suburbancommunity with a population of about 15,000 residents. ABCXYZemploys an estimated 2,000 people on its 63-acre campus and nearlyhalf of the employees reside in Oakwick. ABCXYZ pays approximately$200,000 in property taxes annually to Oakwick, a figure thatgenerally increases by 2% each year. These revenues collected byOakwick go directly into the general treasury with the otherproperty taxes collected by the community. Oakwick’s approvedannual balanced budget totals $16,000,000 for thisyear. ABCXYZ announces that a state in the Southwest has provided alucrative corporate tax incentive that is too appealing to pass up,and thus it is planning to close its operations in Oakwick and moveout at year’s end. As part of its public relations campaign to helpthe environment and create recreational opportunities for youngpeople, ABCXYZ has decided to offer Oakwick the property for just$1 after ABCXYZ has razed the plant and restored in to its naturalstate. However, the community is deed-restricted toonly use this property for open space andrecreational activities. Historically, Oakwick has been indesperate need of recreational amenities for its citizens but hashad very little open space to achieve this goal.Additional facts to consider:1) ABCXYZ has offered the same job at the same salary to anycurrent employee who agrees to move with the company. Half of thecompany’s employees who reside in Oakwick will decide to take theoffer.2) It will be Oakwick’s responsibility to develop the site forrecreation.3) Should Oakwick decide against the deal, ABCXYZ has indicatedthat it would make the same offer to the county and state in whichOakwick is located.-As the chief financial officer for the township ofOakwick, how would you dissect this offer? Consider and identifyall direct and indirect budgetary considerations (both operatingand capital expenses) that may result from this possibletransaction and ABCXYZ’s move out of Oakwick. What would be yourrecommendation to Oakwick’s elected officials?