Reference no: EM132743945
Question: Tutorial questions i need help with:
Strike Ltd is going through a period of expansion. Strike Ltd holds direct or indirect ownership interests in the following five investee companies, Athorn Ltd, Beatie Ltd, Conti Ltd, Douthwaite Ltd, and Gupta Ltd, as detailed below (as at 30 June 2021).
Strike Ltd owns 70% of the issued share capital of Athorn Ltd. According to the constitution of Athorn Ltd, each share conveys one vote to the shareholder at the annual general meetings (AGM) of the company (this is the case of most corporations unless specified otherwise).
Athorn Ltd owns 30% of the issued share capital of Beatie Ltd. In addition, Athorn holds call options which would allow it to acquire 21% of Beatie Ltd's shares at a pre-specified price of $10.50 per share from external unrelated shareholders who currently hold those shares. Beatie Ltd's shares are trading at $11.00 per share on 30 June 2021. Furthermore, according to the constitution of Beatie Ltd, the chief executive officer (CEO) of Athorn Ltd has the authority to remove any director from the board of Beatie Ltd in the event of proven criminal activity on the part of that director, and a new director would be elected by Beatie Ltd's shareholders at an extraordinary AGM convened for this purpose.
Strike Ltd owns 33% of the issued share capital of Conti Ltd. Conti Ltd's remaining 67% share capital is held by an external company, Ricci Ltd. In addition, Strike Ltd has the right to appoint one of four directors on the board of Conti Ltd.
Strike Ltd owns 80% of the issued share capital of Douthwaite Ltd. The remaining 20% shares of Douthwaite Ltd are held by Allerton Ltd. According to a special contractual agreement between Strike Ltd and Allerton Ltd, a minimum of 90% of votes are required to pass any resolution at AGMs regarding major financing and operating decisions of Douthwaite Ltd.
Strike Ltd owns 10% of the issued share capital of Gupta Ltd. Strike Ltd originally purchased the shares in Gupta Ltd with the intention of reselling them in the short-term to make a rapid capital gain.
On 30 June 2021, the CEO of Strike Ltd is seeking your advice regarding the nature of its relationships with all the investee companies for financial reporting purposes and the consequent accounting requirements for recording these investments.
Provide your advice to the CEO of Strike Ltd. Your answer must cover the following:
• Explain the nature of the relationship that exists between Strike Ltd and each of its direct and indirect investees, Athorn Ltd, Beatie Ltd, Conti Ltd, Douthwaite Ltd, and Gupta Ltd.
• Provide recommendations to Strike Ltd about the relevant accounting methods appropriate for recording its investment in each investee company.
• Identify which companies belong to the reporting entity of the "Strike Ltd Group" and explain the accounting implications.
|
What is the total estimated misstatement
: You are evaluating the results for the audit of accounts payable in the audit of Beck Industries. You set performance materiality for accounts payable.
|
|
What audit evidence will you examine
: You are an auditor at a public accounting firm. You are conducting an audit for the financial year ending December 31, 2019. Your client has go public.
|
|
What action maura should take regarding simon request
: Maura Lowe is a payroll accountant for NL Company. She prepares and processes the company's payroll on a weekly basis and has been at NL for only.
|
|
Prepare the journal entries and income statement
: Barangay Convenience Store has inventory beginning balance of P5,000 at the start of the year. The proprietor, Mr. Meliton de los Reyes, had the following.
|
|
Explain the nature of the relationship
: Explain the nature of the relationship that exists between Strike Ltd and each of its direct and indirect investees, Athorn Ltd, Beatie Ltd, Conti Ltd.
|
|
Define risks that could exist in higher education industry
: You are the Auditor-In-Charge employed at Whitinton and Brilliance Students, LLC, a local CPA firm. You are planning an audit of Harvard State University.
|
|
Prepare the entry to replenish the fund
: Amanda's Designs established a $250 petty cash fund on October 1, 2020. Prepare the entry to replenish the fund at the end of each of the following months.
|
|
What gain or loss should o report on the retirement
: On 12-31-19, O issued $5,000,000 of its 4%, 5-year callable term bonds dated 12-31-19. The bonds pay interest every June 30 and December 31.
|
|
What is the expected return on complete portfolio
: Mr. X invested in a portfolio of risk-free asset and a risky portfolio. Mr. X's complete portfolio consists of 40% investment in risk-free asset and 60%.
|