Case Study Information
The Directors of Paris Ltd (a listed company) have come to your accounting firm to seek advice on how to account for the investments they have in the six (6) entities. Prepare a business oriented report for the directors of Paris Ltd to explain the way in which Paris Ltd would account for its investment in the six entities - London Ltd, Sydney Ltd, Beijing Ltd, Tokyo Ltd, Rome Ltd and Morocco Ltd. All shares issued by each of the entities are ordinary shares with normal voting rights.
The directors would particularly like to know:
- the type of investment for each entity (i.e. you need to clearly identify the investor-investee relationship) including a summary of the identifying criteria and an application of this criterion;
- the accounting method to be adopted for this type of investment1; and
- which entities, if any, would form part of the Paris Ltd Group.
You must justify your conclusions with suitable referencing to the relevant Australian Accounting Standards. The report should include any assumptions made and is to clearly identify what, if any, additional information Paris Ltd would need to make a final determination if there is any uncertainty. All key facts as known to the company are provided below:
Report Page Limit: The report is to be no more than four (4) pages in total (includes figures, diagrams, tables).
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London Ltd
- Paris Ltd owns 80% of the issued capital.
- The remaining shares are owned by a diverse group of investors who each hold a small parcel of shares.
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Tokyo Ltd
- London Ltd owns 55% of the issued capital.
- The remaining shares are owned equally between two shareholders.
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Sydney Ltd
- Paris Ltd owns 50% of the issued capital.
- Three directors on the board of Sydney Ltd are appointed by Paris Ltd.
- The current board of directors has five members.
- The remaining shares are owned by a geographically diverse group of investors who each hold a small parcel of shares, many of whom are unlikely to attend meetings.
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Rome Ltd
- Paris Ltd owns 40% of the issued capital.
- Three institutional investors equally hold 50% of the issued capital.
- The remaining 10% of issued capital are owned by a diverse group of investors who each hold a small parcel of shares and do not attend the meetings or take any active role in questioning the actions of the directors.
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Beijing Ltd
- Paris Ltd owns 37% of the issued capital.
- The remaining shares are owned by a small group of investors who each own 15% of the issued shares. One of these shareholders is London Ltd who owns 18% of the shares.
- London Ltd and Paris Ltd each have one appointee on the board of directors which has five members.
- All shareholders take a keen interest in the running of the company and attend all meetings.
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Morocco Ltd
- Paris Ltd owns 50% of the issued capital.
- Madrid Ltd owns the remaining 50% of issued capital.
- Paris Ltd and Madrid Ltd have rights to the net assets of Morocco Ltd.
- The shareholders of Morocco Ltd have a contractual agreement whereby Paris Ltd or Madrid Ltd cannot make any operating,
investing or financing decisions without the expressed consent of the other party.
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Note: You are not required to explain how to apply the accounting method in detail, but rather simply identify (state) the accounting method.
The following criteria
- Identification Problem is identified and discussed within relevant context
- Analysis: Problem is analysed with integration of relevant research of accounting standards and data.
- Conclusion: Consequences are considered, discussed and conclusion reached.
Case Study - Individual Video Presentation
Prepare and submit a five (5) minute (maximum) video presentation to your client of the summary findings of the case study. This should be a formal presentation, as if being presented to the Board of Directors of Paris Ltd at the end of the business case. The presentation should include any powerpoints and/or graphics that are required to enable a professional approach to be exhibited, and these must be able to be read by the marker when viewing the video.
You must identify yourselves clearly at the beginning of the video with your FULL NAME and STUDENT NUMBER as enrolled with UQ, on the FIRST powerpoint slide. You would also need to introduce yourself to your clients at the commencement of your presentation.
The length has been specifically selected to allow your findings to be presented succinctly - excessively longer or shorter videos are not acceptable and will impact marks awarded.
The presentation is to be recorded using any method that will meet the professionalism criteria, and must be uploaded to Blackboard via UQ's Kaltura software, for which there are instructions available on the Course Blackboard site.
The deadline for the update of the video presentation via Kaltura is 12.00 midday on Thursday, 10 May 2018.
Please ensure you upload:
1. The video presentation via Kaltura
2. A PDF of the powerpoint presentation, printed as 6 slides per page.