prob11-11_Acq_Control

prob11-11_Acq_Control - Problem 11-11 (Past exam question:...

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Problem 11-11 (Past exam question: 32 minutes) (Text: Ch. 11) Style Ltd., a retailer of ladies' fashion athletic shoes, commenced operations in 2009 with a December 31, year-end. The market for athletic shoes is highly competitive and because of Style Ltd.'s lack of funds to spend on advertising and lack of good contracts in the industry, the corporation incurred losses in its first years of operations as follows: 2009 2010 Non-capital losses $175,000 $225,000 Net capital losses Nil Nil On April 1, 2011, 80% of the shares of Style Ltd. were acquired by Pro Ltd. Pro Ltd. has been in the business of retailing ladies' fashion shoes for a number of years and has been very successful. A number of years ago, Pro Ltd. had the opportunity to acquire a warehousing operation, which it did. This has also been a very lucrative business. In 2010 alone, Pro Ltd.'s income from these two businesses was in excess of $1,000,000. Pro Ltd. intends to inject additional capital and augment the management of Style Ltd. Pro Ltd.
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prob11-11_Acq_Control - Problem 11-11 (Past exam question:...

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