Question

Novak Ltd has acquired 45% of ordinary shares in Spetz Ltd. Another investor has a 10%...

Novak Ltd has acquired 45% of ordinary shares in Spetz Ltd. Another investor has a 10% shareholding in Spetz Ltd whilst the remaining voting rights are held by thousands of shareholders, none of whom individually hold more than 1% of the voting rights. Novak Ltd holds convertible debt instrument that, as at 31 August 2019, are convertible into ordinary shares of Spetz Ltd at a price of $ 9 per share. At 31 August 2019, the shares of Spetz Ltd trade at $ 8.80 per share. Novak Ltd would hold 60% of the voting rights in Spetz Ltd if Novak Ltd exercise its right to convert the debt. Both companies operate in same industries and would benefit from synergies. Discuss how Novak Ltd’s investment in the ordinary shares of Spetz Ltd should be treated in the consolidated financial statements for the year ended 31 August 2019.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Please give positive rating your feedback is valuable to me.

In case , any problem please leave a comment.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On 30 June 2019, Harris Ltd had the following balances in its equity accounts: Ordinary shares...
On 30 June 2019, Harris Ltd had the following balances in its equity accounts: Ordinary shares (issued at $2 each) 12,000,000 credit Preference shares (issued at $1 each) 6,000,000 credit Retained earnings 9,000,000 credit Additional information is as follows: On 31 December 2016, the company issued 200,000 options to purchase ordinary shares. Each option entitles the holder to purchase 5 ordinary shares at $2.60 each. No options have been exercised by 30 June 2019. On 1 September 2017, the company...
Efficiency Ltd is an existing company that previously issued 200,000 ordinary shares of $10 each and...
Efficiency Ltd is an existing company that previously issued 200,000 ordinary shares of $10 each and 25 000, 8% preference shares at $20 each. On 1 July 2019 Efficiency Ltd decided to raise additional capital via a rights issue of 1 to 5 at $10 per share for every 5 shares currently held. The current market price is $11. A total of 40,000 ordinary shares are to be offered. Applications for 40,000 shares were received by the closing date of...
Clean Ltd. has the following shares outstanding on January 1, 2012: a.     800,000 fully paid ordinary...
Clean Ltd. has the following shares outstanding on January 1, 2012: a.     800,000 fully paid ordinary shares of HK$1 each; and b.     200,000, 5% cumulative convertible preference shares of HK$20 each. Each preference share can be converted to 4 ordinary shares starting on July 1, 2018. During the fiscal year ended December 31, 2012, the following events occurred: On 1 May, 200,000 ordinary shares were issued at full market price of $20 each. On 1 September, the new ordinary shares...
Question 7 Abu Ltd had 100,000 shares in issue, but then makes a 1 for 5...
Question 7 Abu Ltd had 100,000 shares in issue, but then makes a 1 for 5 rights issue on 1 October 2017 at a price of GH¢1. The market value on the last day of quotation with rights was GH¢1.60. Total earnings are GH¢50,000 in 2017 and GH¢40,000 in 2016. Required: Calculate the Earnings per share for the year ended 31 December 2017 and the corresponding figure for 2016 in accordance with IAS 33: Earnings per share Question 5 Adom...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT