You are an assistant accountant for BluePrint Pty Ltd, Public Accounting firm. Your manager Aaron asked...

 

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You are an assistant accountant for BluePrint Pty Ltd, Public Accounting firm. Your manager Aaron asked you to draft a statement of advice for the following three clients regarding their concerns listed below. Client 1 (Max Hills Ltd) Re. Recognition of assets and liabilities in business combination Max Hills Ltd recently purchased 100% of issued shares in Mini Ltd. The directors of Max Hills Ltd discovered the following items were not recognised in Mini Ltd's books at the time of acquisition. Intangible assets a) a household brand name which the market has valued at $10 million; b) a customer list consisting of information about customers, such as their name, personal preferences, order or product backlog and contact information, which is estimated to have a fair value of $5 million; and c) a good customer relationship (customer contracts and related customer relationship) which is highly valued by Subsidiary Ltd, but which is estimated to have a fair value of only $1 million once the ownership and management of Subsidiary Ltd is changed through the acquisition. Contingent liabilities a) a contingent liability involving a claim for infringement of copyright, which the lawyers are of the opinion that there is a 60% chance that Mini Ltd will have to pay nothing, a 20% chance that it has to pay $100,000 and another 20% chance that it has to pay $500,000; and b) a contingent liability involving a possible payment of $1 million compensation to the CEO of Mini Ltd in the event that the CEO is dismissed within 3 years for not meeting the profit targets. Provide advice to the managing director of Max Hills Ltd, with relevant references to the Australian Accounting standards in your answer. You are an assistant accountant for BluePrint Pty Ltd, Public Accounting firm. Your manager Aaron asked you to draft a statement of advice for the following three clients regarding their concerns listed below. Client 1 (Max Hills Ltd) Re. Recognition of assets and liabilities in business combination Max Hills Ltd recently purchased 100% of issued shares in Mini Ltd. The directors of Max Hills Ltd discovered the following items were not recognised in Mini Ltd's books at the time of acquisition. Intangible assets a) a household brand name which the market has valued at $10 million; b) a customer list consisting of information about customers, such as their name, personal preferences, order or product backlog and contact information, which is estimated to have a fair value of $5 million; and c) a good customer relationship (customer contracts and related customer relationship) which is highly valued by Subsidiary Ltd, but which is estimated to have a fair value of only $1 million once the ownership and management of Subsidiary Ltd is changed through the acquisition. Contingent liabilities a) a contingent liability involving a claim for infringement of copyright, which the lawyers are of the opinion that there is a 60% chance that Mini Ltd will have to pay nothing, a 20% chance that it has to pay $100,000 and another 20% chance that it has to pay $500,000; and b) a contingent liability involving a possible payment of $1 million compensation to the CEO of Mini Ltd in the event that the CEO is dismissed within 3 years for not meeting the profit targets. Provide advice to the managing director of Max Hills Ltd, with relevant references to the Australian Accounting standards in your answer.

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Provide advice to the managing director of Max Hills Ltd with relevant references to the Australian Accounting standards in your answer a The directors of Max Hills Ltd should recognize the household ... View the full answer