What is the date of acquisition

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Question -

a) Gala Limited enters into an agreement with the shareholders of Wada Limited on 1 April 2021 to acquire a controlling interest in Wada. The agreement provides that the effective date of transfer is 1 July 2021 and is subject to approval by the shareholders of Gala at a meeting scheduled for 1 August 2021.

Required - What is the date of acquisition? Explain.

b) In June 2020 Mzima and Springs started Nova, a joint venture in manufacturing. Nova was formed as a limited liability company and the contract between Mzima and Springs provided that Mzima should contribute Machineries to the joint venture, with Springs providing all the operating, marketing, selling and distribution services. In order to protect its interests after making such a substantial investment, Nova (supported by Springs) guarantees Mzima a minimum return on its investment of 12% per year over 15 years.

Required - Should this be accounted for as a joint venture? Explain clearly.

c) Financial statements provide all the information that users may need to make economic decisions. Discuss.

Reference no: EM133039564

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