Question

Al Shams tiles manufactures marbles, tiles and sanitary appliances. They manufacture the goods
on a large scale and supply it to different cities of the country. The industry is located close to a
residential area. People living close to the area had a complaint with higher authorities to shift the
industry to other suitable area. They had a complaint because industry makes a lot of noise during
the production process, makes dust and creates mobility issues for the people. The higher
authorities after enquiry, ordered for an immediate shutdown of industry.
Al Shams tiles management have already filed an appeal in a court to give enough time so they
can move the industry elsewhere. The decision of the court may take few weeks. Due to the
expected shut down, Al Shams management is worried about their production and future demand.
Meanwhile, Al Shams have to meet their day to day expenses.
They have less resources available to pay its liabilities and wages to their employees for the coming
months. If they have to change the location of their industry to another place, they have to bear a
lot of cost for shifting. All the machines and equipment’s will be relocated and fixed again. Before
shifting to another location, the management has to consider many factors.
a. In your opinion, how will Al Shams tiles make a research and a survey for the selection of best
possible location and resources for their business? What advice would you like to give to the
management of Al Shams tiles, to consider CSR?
b. If you are the accountant of Al Shams tiles, how would you analyze the financial cost of shifting
the business. What changes will you expect in your annual returns?

Answer 1

(a) AI shams should do several research and survey for the selection of the best possible location and resources for their business these are as follows:

• they must undertake the survey or research for the best loactions avaliable near them or where the other factory are located in order to find place for them
• they must search for the various suppliers who are ready to pay them supplies at consessional rates or on credit so that they can use funds in other places
• they must survey fot the legal compliances applicable to the company
• they must also survey that what are the problems suffered by near by places people so that they can do some CSR activities so that they can survive. etc

In order to survive for long term each and every firm have to give some services to the society these are called CSR services.Some othe CSR services that AI shams should provide are as follows:

• putting machines or chimney and other sound absorbing equipment so that people doesnot get affected
• plantation of trees in society or near by places
• givings goods at concessional rates to people.etc.

(b) As a accountant the financial cost of shifting the business will be capitalize in the books of accounts of the company and will be amortized over the period.

Changes in annual return will be:

• in the principal place of business.
• CSR expenditure to be recorded
• change in depreciation etc.