Arab Open University
Tutor Marked Assignment (TMA)
Academic Year 2018 2019 Semester: First
Branch: Lebanon Program: Business Studies
Course Title: Advanced Financial Accounting Course Code: B326
Student Name: Malek Faisal ItaniStudent ID: 160045
Section Number: 118 Tutor Name: Salam NakfourTotal Mark: Awarded Mark:
Allocated Marks Part A B C Total
Weight 40 35 25 Marks Deduction Criteria Referencing & E-Library (5) Structure and Presentation of ideas (5) Total
Marks 100 Students Total Mark Notes on plagiarism:
According to the Arab Open University By-laws, the following acts represent cases of cheating and
Verbatim copying of printed material and submitting them as part of TMAs without proper academic acknowledgement and documentation.
Verbatim copying of material from the Internet, including tables and graphics.
Copying other students notes or reports.
Using paid or unpaid material prepared for the student by individuals or firms.
Penalties for plagiarism ranges from failure in the TMA to expulsion from the university.
Declaration: I hereby declare that the submitted TMA is my own work and I have not copied any other persons work or plagiarized in any other form as specified above.
Tutor Nambe: Tutor Signature: Date returned:
Invest. In subsidiary 2,125,000$
b) Implied Fair Value = 2,125,000/85% = 2,500,000$
Book Value = 650,000 + 1,100,000 = 1,750,000$
Goodwill = 2,500,000$ – 1,750,000$ = 750,000$
c). Elimination entries
Capital Stock 1,100,000$
Retained earnings 650,000$
Investment in subsidiary 2,125,000 $
Non-Controlling Interest 375,000$
Original amount 2,125,000$
+ Adjusted net income 90,000*85% = 76,500$
– Dividend 10,000*85% = (8,500)$New investment 2,193,000$
Original Amount 375,000$
+ Adjusted Net income 90,000*15%= 13,500$
– Dividend 10,000*15%= (1,500)
New investment = 387,000$
Word Count (88 Word)
Nike Inc.s. Corporate mission and vision explanations advance to precisely speak to the organization’s situation as the main athletic shoes and clothing provider in the worldwide market. An organization’s corporate statement of purpose characterizes the principal goals of the business, particularly as far as its motivation. In this organization examination case, Nike’s statement of purpose prompts the business to help the undertakings of competitors. Then again, an organization’s corporate vision proclamation gives an image of an objective future state of the business. Nike’s vision explanation centers on brand quality and advancement. The organization applies these corporate articulations as aides for the advancement of its business, prompting the formation of business qualities like a solid brand picture, as decided in the SWOT investigation of Nike Inc. Through the development and viable usage of its corporate vision and statements of purpose, the organization underpins its market position as a main maker of games footwear, clothing and gear.
Word Count (155 Words)
Corporate revenues primarily consist of foreign currency hedge gains and losses related to revenues generated by entities within the NIKE Brand geographic operating segments and Converse but managed through the Company’s central foreign exchange risk management program. The percent change has been calculated using actual exchange rates in use during the comparative prior year period to enhance the visibility of the underlying business trends by excluding the impact of translation arising from foreign currency exchange rate fluctuations, which is considered a non-GAAP financial measure.
2. b. Window dressing is particularly common when a business has a large number of shareholders, so that management can give the appearance of a well-run company to investors who probably do not have much day-to-day contact with the business. If a business is closely held, the owners are usually better informed about company results, so there is no reason for anyone to apply window dressing to the financial statements. Window dressing is actions taken to improve the appearance of a company’s financial statements.
The window dressing concept is also used by fund managers, who replace poorly-performing securities with higher-performing ones just before the end of a reporting period, to give the appearance of having a robust set of investments.
Some real example on window dressing used by many famous companies:
Olympus sustained investment company losses of at least $1.4 billion during the 1990s, and was able to cover up the shortfall until recently using various forms of window dressing. Although large accounting frauds occur periodically throughout the world, what is striking about Olympus is that the losses took so long to come to light.
Word Count (269 Words)
Business combination is characterized as a merger of at least two organizations for shared advantages and to join business activities. There are diverse explanations behind various organizations to hold hands – some frame blends for chopping down their costs while some need to expand their scope of items and administrations. There are likewise organizations which need to beat their rivals by making coalitions. Business blends does not just mean merger of organizations. It likewise could be found as business acquisitions, vital unions, amalgamations and so on. Following our subject, the basic role of business mixes is to amplify the benefits for the two substances. For business people, the principle concern is to boost the benefits while keeping here and now and additionally long haul arranging as a main priority. Benefits are boosted by different methods, for example, lessening rivalry, chopping down expense of generation, evade go between and keeping up offering costs.
And concerning 1.the merges, an organization that converges to expand may gain another organization in an apparently irrelevant industry with the end goal to decrease the effect of a specific industry’s execution on its benefit.
Word Count (207 Words)
Firstly, we going to define what is merging? Merger of two or more organizations allows for the generation of cost synergies (administration, production, and listing costs), as well as greater geographical coverage (with a positive impact on revenues and the possibility of further growth).The second is through the merger of one or more companies into another company, with the result that the participating companies retain their identities. The purpose of a merger is of an economic/industrial nature.
There are three noteworthy strides in a merger exchange: arranging, goals, execution.
1. Arranging, which is the most unpredictable piece of the merger procedure, involves the investigation, the activity plan, and the arrangements between the gatherings included.
More in detail, the arranging stage additionally incorporates:
signing of the letter of purpose which begins off the arrangements;
the selecting of counselors who assume the job of specialists, analyzing the qualities, shortcomings, openings, and dangers of the merger;
detailing the timetable (due date), conditions (share trade proportion), and sort of exchange (merger by mix or through the arrangement of another organization);
Expert provide details regarding the consistency of the offer trade proportion, for the majority of the organizations included.
2. The goals is essentially administration’s endorsement first, at that point by the investors associated with the merger plan.
The goals arrange additionally incorporates:
the Board of Directors assembling an exceptional investors’ conference whose thing on the plan is the merger proposition;
the exceptional investors’ gathering being called to pass a goals on the thing on the motivation;
any restriction to the merger by loan bosses and bondholders inside 60 days of the goals;
Green light from the Italian Antitrust Authority that assesses the effect of the merger and forces any commitments as an essential for endorsing the merger.
3. Execution is the last phase of the merger procedure, including enrolment of the merger deed in the Company Register.
This is on account of, notwithstanding the time required in fact, there are issues identifying with the offer trade proportion between the consolidating organizations which is once in a while acknowledged by the gatherings without drawn-out arrangements.
The most obstacle that may central to merger failure are:
1. Numbness while the gatherings to a merger or securing can’t trade monetarily touchy data preceding being under normal possession, there is sufficient urgently imperative and lawfully allowable readiness work to keep a reconciliation group occupied for a while before the very first moment
2. No normal vision without an unmistakable explanation of what the combined organization will rely on, how the association will work, what it will feel like, and what will be diverse contrasted with how things are today, there is no point of the assembly not too far off and the associations will never mix.
3. Nasty shocks coming about because of poor due industriousness this sounds fundamental, yet occurs so regularly.
4. Team resourcing Resource prerequisites are all the time belittled. It can take a few months to discharge the best players from day by day business to join the reconciliation team(s), discover an inlay for them, join contractual workers to top the holes and set off the group’s foundation. Most organizations begin past the point of no return and are not prepared on once the arrangement is finished.
5. Poor administration Lack of clearness with respect to who chooses what, and no unmistakable issue goals process. Incorporating associations raises a heap of issues that require quick goals or else the task reaches a stop. Once more: speed matters, yet with a cool headed basic leadership process.
Word Count (591 Words)
Under the Companies Act a parent organization isn’t required to get ready combined monetary proclamations for a money related year in which the gathering headed by that organization qualifies as a little gathering or a medium-sized gathering. A gathering isn’t qualified for exclusion if any individual from the gathering is an open organization or a body corporate that has control under its constitution to offer its offers or debentures to people in general and may legitimately practice that control; an approved establishment under the Banking Act 1987; an insurance agency; or an approved individual under the Financial Services Act 1986. Under the Companies Act and Financial Reporting Standard 2, Accounting for Subsidiary Undertakings, a parent undertaking is excluded from getting ready gathering accounts when it is itself a backup of a parent organization in the European Union and united money related explanations are set up at the most abnormal amount. Additionally, a parent undertaking is absolved from getting ready gathering accounts when the majority of its auxiliaries are barred.
As indicated by GAAP (Generally Accepted Accounting Principles), parent organizations must get ready solidified monetary explanations to provide details regarding the money related prosperity of both the parent organization and every one of its auxiliaries.
Since every backup additionally readies its very own independent monetary report, combined money related articulations may appear to some to be a superfluous additional progression. These announcements are regularly arranged with the utilization of budgetary solidification programming which takes monetary figures from every individual auxiliary and consolidates them into one by and large report. An investigation of the significance of merged monetary Proclamations uncovers these announcements offer a few advantages to speculators, money related experts and other people who might assess the soundness of the parent organization.
Who Prepares Merged Financial Reports?
United monetary reports are set up by any parent organization that possesses at least one auxiliaries. For instance, usually for one organization to buy littler organizations that can supplement the essential business and make it significantly more grounded. The littler organizations can help the productivity of the parent organization while likewise proceeding to work as discrete elements. Every backup must set up its very own money related proclamations including monetary record, pay articulation, explanation of money streams and explanation of held income. This data for every backup is then joined utilizing solidification programming to make merged monetary reports that speak to the money related position of the parent organization.
Concerning the consolidated financial report and how its prepared, 1.For instance, if a parent organization buys products or administrations from a backup, the parent organization’s buy and the auxiliary’s deal are both disposed of so this exchange doesn’t misshape the last figures. In the combined report, the exchanges among auxiliaries or an auxiliary and a parent organization are disposed of to keep away from double calculation. Combination programming is ordinarily used to get ready merged money related reports since it isn’t as straightforward as including the budgetary articulations from every backup.
Advantages of Consolidated Financial Reports
1. A portion of the numerous advantages of combined money related reports include: Finish Overview Consolidated explanations permit speculators, money related investigators, entrepreneurs and other invested individuals to get a total outline of the parent organization.
2. On the off chance that the parent organization possesses nine backups, there are 40 separate independent budgetary reports to see i.e. the four essential monetary explanations for every auxiliary in addition to the parent organization.
3. Updates to Consolidated Financial Statements over time, combined budgetary explanations will keep on developing to make the way toward assessing a parent organization much more straightforward.
In conclusion to the above consolidated financial statements can be complex to prepare, especially for parent companies that include many subsidiaries. Knowing all the important benefits of consolidated financial statements, it is easier to understand why GAAP requires them. However, consolidation software has made preparation easier and standards boards like FASB and IASB regularly work to improve the process.