Task ? 2 Specification: Alfa undertaking owns 70% of shareholders’ equity of Beta subsidiary undertaking. Mr....

Task ? 2

Specification:

Alfa undertaking owns 70% of shareholders’ equity of Beta subsidiary undertaking. Mr. Ivanov, Director of Beta undertaking owns the other 30% shares of Beta undertaking. Beta undertaking sold real property to Mr. Ivanov for 3 000. Mr. Ivanov is not a director of Alfa undertaking.

Question:

How should the management disclose the sale of the subsidiary’s real property to the director of the subsidiary:

a) in separate financial statements of Beta subsidiary undertaking;

b) in the Group’s consolidated financial statements?

Expert Solution

Related party relationships are a normal feature of commerce and business. For example, entities frequently carry on parts of their activities through subsidiaries, joint ventures and associates. In those circumstances, the entity has the ability to affect the financial and operating policies of the investee through the presence of control, joint control or significant influence

Relationships between a parent and its subsidiaries shall be disclosed irrespective of whether there have been transactions between them. An entity shall disclose the name of its parent and, if different, the ultimate controlling party. If neither the entity’s parent nor the ultimate controlling party produces consolidated financial statements available for public use, the name of the next most senior parent that does so shall also be disclosed

from the above we can conclude that it is a related party transaction therefore it should be disclosed in beta subsidiary undertaking and the group's consolidated financial statements

ekkarill92 answered 1 year ago

Task ? 3 Specification: Undertaking “A” entirely owns subsidiary undertaking “B” (100% of the authorised capital)....

Task ? 3 Specification: Undertaking “A” entirely owns subsidiary undertaking “B” (100% of the authorised capital). One of directors of subsidiary undertaking “B” is a major shareholder of a third undertaking “D”, which otherwise will be considered as independent. Undertaking “D” supplies commodities to subsidiary undertaking “B” at a price determined by independent parties. Director is a member of the key management personnel of undertaking “B”. Question: Should the management of undertaking “A” disclose undertaking “D” as the related party,...

Task ? 6 Specification: Undertaking “A” owns 75% of ordinary shares of undertaking “B” that, in...

Task ? 6 Specification: Undertaking “A” owns 75% of ordinary shares of undertaking “B” that, in turn, owns 55% of ordinary shares of undertaking “C”. Undertaking “A” produces the Group’s consolidated financial statements. Question: Should the consolidated financial statements disclose related party transactions in respect of intra-group transactions.

Task ? 5 Specification: Undertaking “A” is a commercial entity that produces the financial statements...

Task ? 5 Specification: Undertaking “A” is a commercial entity that produces the financial statements in accordance with IFRS. Its director is appointed by ordinance of Director of the parent undertaking. A undertaking director is involved in decision-making process (approval of budget, contractual terms and conditions) however the final approval is required on behalf of Director of the parent undertaking to make decisions. Question: Should undertaking “A” disclose director as the related party, if his decisions require approval of...

Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary corporation. During the...

Duke Corporation owns a 70 percent equity interest in Salem Company, a subsidiary corporation. During the current year, a portion of this stock is sold to an outside party. Before recording this transaction, Duke adjusts the book value of its investment account. What is the purpose of this adjustment? How would the parent company record this transaction?

A company owns common stocks with a beta coefficient of 1.2. If the cost of equity...

A company owns common stocks with a beta coefficient of 1.2. If the cost of equity is 13% and the expected market return is 11% what is the risk-free rate?

1. When preparing a consolidated balance sheet: A.neither investment in subsidiary nor the subsidiary's shareholders' equity...

1. When preparing a consolidated balance sheet: A.neither investment in subsidiary nor the subsidiary's shareholders' equity will be presented B.the shareholders' equity of the parent will be eliminated but investment in subsidiary will be presented C.investment in subsidiary will be presented but the shareholders' equity of the subsidiary will be eliminated D.both investment in subsidiary and the shareholders' equity of the parent will be eliminated 2.Goodwill is a(n) ________ on the ________. A.longminus−term investment; consolidated balance sheet B.current asset; subsidiary's...

Task ? 4 Specification: The following relationships exist among undertakings1, 2, 3, 4, 5 and 6:...

Task ? 4 Specification: The following relationships exist among undertakings1, 2, 3, 4, 5 and 6: Undertaking 1 Misters A and B are the board members. The largest shareholder is Mister D – 45%; Undertaking 2 is entirely owned by Undertaking 1; Undertaking 3 is entirely owned by Mr. B; Undertaking 4 is entirely owned by Mr. D; Undertaking 5 Chairman is the son of Mr. A; Undertaking 6 Wife of Mr. B is its employee. Assignment: To determine...

An all-equity firm is considering the following projects: Project Beta IRR W .70 9.9 % X...

An all-equity firm is considering the following projects: Project Beta IRR W .70 9.9 % X .77 10.9 Y 1.43 14.4 Z 1.54 17.4 The T-bill rate is 5.4 percent, and the expected return on the market is 12.4 percent. a. Compared with the firm's 12.4 percent cost of capital, Project W has a (Click to select)higherlower expected return, Project X has a (Click to select)lowerhigher expected return, Project Y has a (Click to select)higherlower expected return, and Project Z...

TASK-2 In a warehouse the Materials manager Mr. Fahad is looking forward to categorize the materials...

TASK-2 In a warehouse the Materials manager Mr. Fahad is looking forward to categorize the materials stocked in his warehouse using ABC analysis. He decided the criteria that all the materials above 20% of annual consumption value shall be categorized as A-items, the items between 10% to 20% of annual consumption value shall be categorized as B-items and the items below 10% of annual consumption value shall be categorized as C-items. Using the following inventory records you are required to...

Translation of financial statements (2 years) Assume that your company owns a subsidiary operating in Germany....

Translation of financial statements (2 years) Assume that your company owns a subsidiary operating in Germany. The subsidiary conducts most of its business activities in the European Economic Union and maintains it books in the Euro as its functional currency. Following are the subsidiary's financial statements (in €) for the prior and most recent years: The relevant exchange rates for the $US value of the Euro (€) are as follows: Prior Year Current Year BOY rate $1.29 $1.21 EOY rate...

Question