According to the given situation, LBX Pty Limited primarily had different shareholders that had around 25% of shares that was essentially assumed by Millionaires Club along with Pty Limited whilst the left over shares are possessed by the founder of the company LBX Pty Limited. Additionally, it is significant to allow for all the evidences as well as situations for assessing control over financiers. However, Millionaires Club has three different seats in the Board and has authority to put forward views in some of the central activities that occur within the business concern. As per the stipulations mentioned under paragraph B-19 of the standard AASB 10, a financier has the authority to exercise control over the process directing diverse functionalities of the business concern (Aasb.gov.au, 2017).
In this case it is imperative to take into consideration that Millionaires Club have the need to engage in the process of assessment of the rights for the purpose of determination of consolidation necessities that manage all of the actions. However, the actions that controlled by a financier necessarily have the protecting rights at the time when they engage in particular events or else situations. It can be hereby observed that financial exercises of BBT are essentially controlled by different officials of Millionaires Club for a time period of around 5 years. Thus, it can be said that the controls primarily remain in the hands of the officials of Millionaires Club who are responsible to look after diverse financial operations of the company. In a way, it can be hereby forecasted that consolidation is not required and cannot be undertaken at the time when different associates of Millionaires Club do not have position in the Board (Carnegie & O’Connell, 2014).
According to the given state of affairs, it can be said that CTL has two different financiers in which Millionaires Club reflects accountability in delivering loan and BJL for managing the managerial actions. However, when there are two different financiers engaged in any dealing, then diverse actions of CTL have the need to be focussed or else controlled by the two investors collectively and then designed jointly (Carnegie & O’Connell, 2014). In this case, both the financiers have the need to be in agreement to a specific solution to any difficulty encountered by the business concern, or else it might prove to be very complicated. Nonetheless, CTL cannot be properly controlled by a single individual financier. Again, the concern in CTL can be analysed from specific joint arrangement according to stipulations of AASB 11 (Aasb.gov.au, 2017).
Analysis of this investment situation reveals that there are three different financiers that are present in the case. In this case, each of the financiers has identical share of around 33.3%. However, it can again be observed from this case that daily functionalities of PGH Pty Limited are directed appropriately by Millionaires Club since they have no more than one seat in the company’s Board. However, the two shareholders referred to as CCL as well as GJL possess barely one seat out of the total seats of three existent in the Board, However, they are considered as passive financiers. Again, it is evidently stipulated in the Paragraph B-19 of the regulation standard AASB 10 that at the time when a financier demonstrates passive interest towards corporation, then they predominantly have certain unique association with the financier (Schaltegger et al., 2017). However, it can be hereby mentioned that Millionaires Club has ample authority to exercise control over PGH Pty Limited where these financiers are permitted for certain rights and reflects additional passive concern towards the business concern. Thus, engagement of Millionaires Club in actions on a daily basis activities led to exerting certain control with huge exposure on inconsistency in return (Beekes et al., 2015).
Analysis of the present situation helps in understanding the fact that Millionaires Club is the possessor of approximately 75% of shares of the company JB Hi-Fi. However, Millionaires Club does not hold any seat in the Board of the company. Therefore, they are not responsible for management or else any type of decision making process that is associated to finance as well as operations. Again, it can be hereby observed that there had taken place consolidation of company’s assets owing to insufficiency on top of continuous poor as well as unsteady performance (Henderson et al., 2015). Again, it can be hereby noted that Millionaires Club in real possesses major fraction of shares of the company JB Hi-Fi in which they do not even have voting authority. Essentially, it is the authority of a financier to exert control though they do not possess voting authority according to B-38 of the regulation standard AASB 10. Again, there had been adequate control that is undertaken by the financiers at the time when they get involved in the process of management of pertinent actions and maintenance of contractual necessities. Again, it can be stated that JB Hi-Fi is not involved in the process of direction of actions that occur in business and therefore control cannot be exerted.
According to the present state of affairs, equity interest is said to be properly shared by the firm Wiley Plus Limited along with Wiley & Sons Australia Limited. In this case, 70% of the total shares of the company Wiley Plus Limited are acquired by the firm Wiley & Sons Australia Limited. Moreover, it is observed that goodwill can be enumerated from the date of acquisition after taking into consideration the interest of different acquirer of equity by utilizing equity interest (Chaibi et al., 2014). In essence, there are various techniques of valuation that can be utilized for enumerating the value of equity interest of acquirer. Thus, the goodwill value can be reflected as below:
As per the present requirement, it can be hereby observed that determination of the amount can be registered as the specific amount that stems from the loss incurred from impairment that again get deducted from the goodwill from specifically acquisition date (Roy, 2015). Essentially, the amount of goodwill would remain the same as it is the case mentioned above since the overall fair value of different identifiable assets along with liabilities are not presened in the given case
As per the stipulations mentioned under the regulation standard AASB 3, it can hereby be supposed that any kind of non-controlling interest in the acquirer is enumerated at fair value. However, this can be considered as one of the alternatives in which goodwill has the requirement to be accounted on particular consolidation. Essentially, the insinuation of goodwill helps in determination of the date of acquisition when a particular acquire can detect independently from goodwill as well as acquirement of identifiable assets/resources. Lee (2016) asserts that it is appropriately stated in the paragraphs B 41 to 45 that enumeration of the fair value of explicit identifiable assets in addition to identifiable assets can be carried out by a specific acquiree. Fundamentally, it mainly recognizes different kinds of identifiable assets along with liabilities that consider Standard in which it renders restricted exceptions to particular principle measurement (Franks, 2014).
As per the regulations stated under AASB 3, it can be said that any type of non-controlling interest that can be seen in the acquirer can be appropriately enumerated as the balanced share of acquiree on diverse matters associated to identifiable net assets (Floyd & List, 2016). As per paragraphs B 23 to 24, there is non-controlling interest of a particular acquiree that undertakes a specific amount of retained earnings along with other equity interests.
References
Aasb.gov.au. (2017). [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/AASB3_03-08_COMPoct10_01-11.pdf [Retrieved 8 Oct. 2017].
Aasb.gov.au. (2017). [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/AASB3_03-08_COMPoct10_01-11.pdf [Retrieved 8 Oct. 2017].
Carnegie, G. D., & O’Connell, B. T. (2014). A longitudinal study of the interplay of corporate collapse, accounting failure and governance change in Australia: Early 1890s to early 2000s. Critical Perspectives on Accounting, 25(6), 446-468.
Schaltegger, S., Etxeberria, I. Á., & Ortas, E. (2017). Innovating Corporate Accounting and Reporting for Sustainability–Attributes and Challenges. Sustainable Development, 25(2), 113-122.
Beekes, W., Brown, P., & Zhang, Q. (2015). Corporate governance and the informativeness of disclosures in Australia: a re?examination. Accounting & Finance, 55(4), 931-963.
Henderson, S., Peirson, G., Herbohn, K., & Howieson, B. (2015). Issues in financial accounting. Pearson Higher Education AU.
Chaibi, H., Trabelsi, S., & Omri, A. (2014). Investment opportunity set, corporate accounting policy and discretionary accruals. Journal of Economic and Financial Modelling, 1(1), 1-12.
Roy, M. N. (2015). Statutory Auditors’ Independence in Corporate Accounting Scandals: A Case Study of Satyam Computer Services Ltd. Prabandhan: Indian Journal of Management, 8(2), 35-48.
Lee, R. T. (2016). Fixed and Variable Costs: When Accounting Is the Opposite of Cash Flow Reality. Journal of Corporate Accounting & Finance, 27(4), 31-35.
Franks, J. (2014). LibGuides: Graduate Accounting Empirical Research: Accounting & Finance Databases.
Floyd, E., & List, J. A. (2016). Using field experiments in accounting and finance. Journal of Accounting Research, 54(2), 437-475.
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