B407F Week 3 Tutorial Question

B407F Week 3 Tutorial Question - B407F Week 3 Tutorial -...

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B407F Week 3 Tutorial - Legal requirements of group accounts Question 1 Identify which of the following companies are subsidiaries of A Ltd. A Ltd. owns 100% of B Ltd. A Ltd. owns 55% of C Ltd. B Ltd. owns 80% of D Ltd. A Ltd. owns 15% of E Ltd. E Ltd. owns 100% of F Ltd. Question 2 Study the following list of companies and shareholdings. Alpha Ltd. owns 100% of Beta Ltd. Alpha Ltd. owns 15% of Delta Ltd. Alpha Ltd. owns 20% of Epsilon Ltd. Beta Ltd. owns 80% of Gamma Ltd. Beta Ltd. owns 60% of Epsilon Ltd. Delta Ltd. owns 100% of Phi Ltd. Phi Ltd. owns 10% of Gamma Ltd. (a) Show the relationships among these companies in chart form. (b) Identify those companies which belong to the economic entity, Alpha Ltd. and subsidiaries. (c) Identify those companies which are holding companies. Question 3 William Tam is the Financial Controller of Forever Success Company Limited (“FSCL”). He is in the process of finalizing the consolidated financial statements of FSCL as of and for the year ended 31 December 2008. As of 31 December 2008, FSCL has equity interests of 51% in a subsidiary, best Garden Limited (BGL”). The remaining 49% of equity interest of BGL is owned by another company, Skynet
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Company Limited (“SCL”). In July 2008, FSCL entered into an option agreement with SCL under which FSCL granted an option to SCL to acquire from FSCL 5% of equity interest of BGL at zero consideration. Such option is exercisable during the period from 1 January 2009 to 31 December 2009. GBL has been making a profit for several years. The net asset amount of BGL approximates HK$50 million as of 31
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B407F Week 3 Tutorial Question - B407F Week 3 Tutorial -...

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