Identify the consolidating entity of aprilia canada

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Reference no: EM132949755 , Length: word count: 350

APRILIA CANADA., a corporation, was formed in 1985 to design and develop a motorcycle. APRILIA CANADA. is 55 percent owned by Piaggio Group (Motorcycle Racing company) and 45 percent owned by Noale (an electric motorcycle technology). The decision- making authority of APRILIA CANADA. is equally shared between the Piaggio Group and Noale: the APRILIA CANADA. board of directors is composed of three members appointed by Piaggio Group and three members appointed by Noale. APRILIA CANADA.'s board of directors sets the yearly company budgets; hiring and compensation of management; and approves all-important contracts. As part of the agreement, all motorcycles are produced by APRILIA CANADA. will have Piaggio Group's logo and will be sold at Piaggio Group- branded dealers. Piaggio Group is an established motorcycle manufacturer that has been producing motorcycles in Canada for a century.

  • To meet the governmental Act of lowering emissions, Piaggio Group has been evaluating many ways to enter the electric motorcycle market. Piaggio Group does not currently have viable technology to produce highly efficient electric motorcycles. Noale was established to develop highly efficient battery technology for electric motorcycles. Even thoughNoale has not created electric cruisers in a mass showcase,the battery innovation is tried and exceedingly esteemed. Piaggio Group and Noale together shaped APRILIA CANADA to create electric bikes for the mass, market APRILIA CANADA. benefits from Noale 's proprietary technology and Piaggio Group's manufacturing expertise and access to credit markets and distribution channels. APRILIA CANADA. is financedwith 25 percentequity and 75 percent debt. When APRILIA CANADA. was formed, Noale did not have access to enough cash at inception to fund its equity interest. To purchase its equity interest, Noale received a loan from Piaggio Group. The debt financing was obtained in the form of a credit facility from a bank. For the bank to grant debt to APRILIACANADA., it required that PiaggioGroup guarantee the loan.

Required:

Problem 1) Is APRILIA CANADA a Special Purpose Entity (SPE)? Please explain why or why not.

Problem 2) Identify the consolidating entity of APRILIA CANADA? if any. And why? explan in 350words

Reference no: EM132949755

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