Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Accounting Basics Expert

Assignment Topic:

Andrew, Brian, Colin, Diana and Elizabeth were the directors of the Gemsales Pty Ltd, a company engaged in the business of importing and supplying jewellery as wholesalers to local market.

The company decided that as the market was becoming more competitive it required expanding its business as it felt with raised volumes of sales it would be capable to lower its prices and be more competitive. In order to do so it received a $4 million dollar loan from the Friendly Bank Ltd. $3 million was employed to buy more stock and $1 million was employed to buy a large new warehouse and showrooms from Traders Pty Ltd.

Colin was not at the meeting that had made such decisions as he was in hospital recovering from a serious accident. Elizabeth, as was her usual custom, had not attended the meeting however signed the necessary documentation agreeing to the expansion of the business and the getting of the loan. Diana, who attended, said she did not know if she agreed and refrained from voting. Andrew and Brian both voted to go further on with the expansion and getting of the loan.

At about this time Brian has established contact with Victor, who was setting up a new business as a retailer of jewellery. Victor was looking for consistent suppliers, however said he would not deal with Gemsales Pty Ltd as he did not like Andrew, the Managing Director. Not wishing to miss out on such a lucrative business opportunity, Brian arranged to set-up his own business as a jewellery wholesaler and a contract was entered into between Victor and Brian for the supply of jewellery.

After six months, Brian resigned as a director. At the same time it was obvious the company had over-extended itself and was insolvent and could not pay the interest on its loans.

This as well became clear that Brian was a main shareholder in Traders Pty Ltd and the other directors were oblivious of this at the time of the purchase of the warehouse and showrooms. Moreover, Brian had been approaching other established customers of Gemsales Pty Ltd and had secured orders for his own business.

Advise as to the liability of ALL parties both beneath common law and the Corporations Law. In your answer you must address all the issues associating to each of the directors and their responsibilities to the corporation.

PLEASE NOTE THE FOLLOWING INSTRUCTIONS:

References should be cited in Harvard referencing style (ex: Smith 1992). The assignment should comprise a bibliography (list of references employed in the assignment). The Internet might be used for authoritative reference material provided the source, author, date of access, and site address is obviously shown in footnote format.

Additionally to sources from the Internet, at least three hard-copy sources should as well be used. Such can be either books or articles or both.  Materials from any common law jurisdiction might be employed.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9139

Have any Question? 


Related Questions in Accounting Basics

Discussion your new client barbara has just formed a new

Discussion: Your new client, Barbara, has just formed a new corporation that provides consulting services to couples contemplating marriage. She has learned from her accountant that there will be items in her business th ...

Question - horngrens financial amp managerial

Question - HORNGREN'S Financial & Managerial Accounting Preparing the statement of cash flows-indirect method Accountants for Carlson, Inc. have assembled the following data for the year ended December 31, 2016: 2016 201 ...

Case study 1 apple merging technology business and

Case Study 1: Apple Merging Technology, Business, and Entertainment 1) Why are data, information, business intelligence, and knowledge important to Apple? Give an example of each type in relation to the iPad. 2) Explain ...

Question - robin corporation purchased 150000 previously

Question - Robin Corporation purchased 150,000 previously unissued shares of Nest Company's $10 par value common stock directly from Nest for $3,400,000. Nest's stockholder's equity immediately before the investment by R ...

Question - a company receives a 850 utility bill for the

Question - A company receives a $850 utility bill for the current month but does not plan to pay the bill until early next month. Record the receipt of the utility bill using (a) accrual-basis accounting and (b) cash-bas ...

Question - blacken company manufactures motorcycles the

Question - Blacken Company manufactures motorcycles. The company's management accountant wants to calculate the fixed and variable costs associated with utility cost incurred by the factory. Data for the past five months ...

Question - hillary clinton is the vice president of finance

Question - Hillary Clinton is the Vice President of Finance for Trump Industries. At a recent finance meeting, Hillary made the following statement: "the managers of a company should use the same information as the share ...

Question - the machardee plumbing company has common stock

Question - The MacHardee Plumbing Company has common stock outstanding. The stock paid a dividend of $2.00 per share last year, but the company expects that earnings and dividends will grow by 25% for the next two years ...

Question - on january 1 20x1 mighty entity pays the fair

Question - On January 1, 20X1, Mighty Entity pays the fair value of $50,000 for a new piece of machinery with an estimated useful life of 8 years. The machine has a drum that must be replaced every four years and costs $ ...

Question - alpha corp had 15000 of dividends in arrears for

Question - Alpha Corp. had $15,000 of dividends in arrears, for cumulative, non-participating preferred stock as of January 1, 2018.This value of dividends in arrears was for the fiscal years of 2016 & 2017. During the f ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As