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Global Net Ltd is an internet service provider in Australia which employs staff located overseas to man its call centres. Competition in this industry is intense and Global is about to issue more shares in the following two years. The executive bonuses are tied to Global Net’s earnings performance. To boost its profits in the prospectus to be prepared for the share issue, the following ideas have been actioned for the current year (ending 30 June):
a. Make deep cuts in pricing through to the end of the year to generate additional revenues as Global expects to attract new customers.
b. Record executive year-end bonus compensation accrued for the current year when it is paid in the next year, after the June fiscal year-end.
c. Move the call centres to cheaper and older rental premises which is of inferior building quality.
d. Slash training costs by offering employment to new casual staff who will have to pay for the training courses certifying their attainment of skills required to qualify as permanent staff.
e. Sell off equipment before year-end. The sale would result in one-time gains that would boost the company’s profits. The owned equipment could be replaced with leased equipment at a lower cost in the current year.
f. Record the service revenue received in cash in the current year on plans effective from 1 July of the next year as revenue for the current year.
Requirements on pages 7 to 8?