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BACKGROUND

Store Norske Spitsbergen Kulkompani is a Norwegian based coal mining company. The headquarters for Store Norske Spitsbergen Kulkompani Corporation is located in Longyearbyen. Store Norske is 99.9% owned by the Norwegian state. Coal India Limited is an India based coal mining company. The headquarters for Coal India Limited is located in West Bengal. Coal India Limited is 90% owned by the Indian state. Store Norske and Coal India Limited are considering a business venture to increase the visibility of Store Norske in Nigeria and increase the scope of the Coal India Limited operations.

ISSUE:

The two companies are considering the following possible business ventures:

1) Store Norske is considering using Coal India Limited to assist them in their international business operations. What issues will Store Norske have to address with respect to any business transactions between Store Norske and Coal India Limited? Discuss.

2) Store Norske is considering purchasing a majority interest in Coal India Limited to make it easier to utilize Coal India Limited in their operations. What issues will Store Norske have to address with respect to this decision? Will this situation alleviate any of the issues addressed in 1) above? Discuss.

3) Store Norske is considering forming a joint venture company with Coal India Limited, jointly owned 50% each. What issues will the new company have to address in doing business assuming the joint venture will be located in the Nigeria? Discuss.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91736163

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