prob12-1_Assoc_Rules

prob12-1_Assoc_Rules - (c) Joe owns 100% of the shares of A...

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Problem 12-1 (Text: Ch. 12) In each of the following unrelated situations, determine whether A Ltd. is associated with B Ltd. Provide reasons for your answer. (a) Joan owns 70% of the voting shares of A Ltd. and 30% of the voting shares of B Ltd. Another 25% of the voting shares of B Ltd. are owned by A Ltd. and the remaining 45% of the shares of B Ltd. are owned by strangers. (b) John owns 100% of the shares of A Ltd. and Jill owns 100% of the common shares of B Ltd. John owns 100% of the non-voting, redeemable, retractable, 8% preference shares issued by B Ltd. These shares were issued for $80,000 in 1988, when the prescribed rate of interest was 10%. The redemption value of the shares is $80,000. John and Jill are husband and wife.
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Unformatted text preview: (c) Joe owns 100% of the shares of A Ltd. and his son, Jack, age 20, owns 100% of the shares of B Ltd. B Ltd. markets the products manufactured by A Ltd. Prior to the incorporation of B Ltd., in 1988, A Ltd. marketed its own products. Jack is currently attending the University of Waterloo and thus, his father carries on the day-to-day operations of B Ltd. and makes the necessary business decisions for Jack. (d) Jim and Jane are cousins. They each own 50% of the common shares of A Ltd. A Ltd. owns 100% of the common shares of X Ltd. John, Jim's father, owns 100% of the common shares of B Ltd., as well as preferred shares of X Ltd. valued at $50,000. The value of all the shares of X Ltd. is estimated to be $80,000....
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This note was uploaded on 03/24/2012 for the course ACCOUNTING IAF841 taught by Professor Ganesh during the Spring '12 term at Seneca.

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