ABC_Group assignment case and guide_2024AUT

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22320 Accounting for Business Combinations Autumn 2024 Group Assignment Introduction The aim of the group assignment is to enhance students’ ability to conduct independent research and apply the knowledge and skills learned in this subject to evaluate various facets of real-world merger and acquisition transactions . Students will also have the opportunity to work in groups in preparing a written report of their findings using a format similar to that used by professional consultants in addressing business problems. Objectives This assessment relates to the following subject and program learning objectives:  SLO 1. Apply the regulations that determine accounting and reporting for economic entities.  SLO 4. Discuss, in written form, the appropriate accounting treatment applicable in the given circumstances.  PLO 2.1. Locate and critically evaluate relevant data and literature to address business problems through a research approach. Critically evaluate data and resources in the context of relevant academic literature.  PLO 2.2. Apply critical and creative thinking to address issues in business. Weighting and marks 20% of the total marks for the subject. Group size and composition The assignment is to be completed in groups of five students, except with the permission of the subject coordinator. All students in a group must be enrolled in the same tutorial class. Students are to self- sign-up into groups on Canvas based on their tutorial enrolment by Week 5 at the latest . Assignment Questions On 19 April 2023, Wesfarmers Limited (ASX: WES ), through its wholly-owned subsidiary Australian Pharmaceutical Industries Pty Ltd, proposed to acquire 100 percent of the outstanding shares of SILK Laser Australia Limited (ASX: SLA ). Based on your own research, critically evaluate and analyse the acquisition of SILK Laser Australia Limited by Wesfarmers Limited. Your discussion should address but is not limited to the following questions. 1. What do you think are the economic rationales driving this acquisition for Wesfarmers? How did the share price of SILK react to the initial and subsequent acquisition offers by Wesfarmers? What can you infer from the price reaction as regards the underlying economic value of SILK? 2. Discuss the deal structure and your evaluation of the choices made by Wesfarmers. These include, but are not limited to, the timing of the deal, acquisition method used, offer price, payment methods (cash or shares), premium, etc. 3. A cursory look at the 2023 statement of financial position of SILK reveals that intangible assets (including goodwill) accounted for more than 50% of the total assets. Based on your own research, 1

explain what these intangible assets are and where they are coming from. 4. Did Wesfarmers recognize any goodwill or bargain purchase gain arising from the acquisition of SILK? Based on AASB 3, apply the acquisition method and prepare an acquisition analysis to find out how much the goodwill or bargain is. Discuss any significant discrepancy between the assessed fair value and the amount at which these assets and liabilities are carried in the June 2023 statement of financial position of SILK. Pay particular attention to the fair value of intangible assets acquired. [ Hint: Refer to Wesfarmers’ half-yearly report (February 2024) for information on the provisional fair value recognized on acquisition of SILK .] 5. The Scheme Implementation Deed for the acquisition of SILK by Wesfarmers contains provisions for “no-shop, no-talk, no due diligence and matching right”. Explain, in your own words, what these provisions are and why are they included in the deed. Additional information: While the assignment is largely practical in nature, assignments gaining higher marks will need to refer to academic literature to support arguments, in addition to internet and practitioner-based literature. These can be located through search engines (e.g., Google Scholar) and the UTS library website. You are only to use publicly available information in order to complete this assignment. For example, the internet, annual reports, company announcements, newspaper, journal articles, databases, and books. One important source of information for this assignment is Morningstar’s DatAnalysis Premium database available via the UTS Library website. You can obtain all the corporate announcements made by the acquirer and acquiree, their scheme booklet and annual reports, together with their historical stock prices. Just visit the UTS Library website and search for DatAnalysis Premium database to gain access. Once you are in the database, you can key in the ASX ticker of either company in the search box to access company-specific information. Academic integrity Academic integrity is of utmost importance at UTS. For a guide to practicing academic integrity, visit the page on Canvas using the link here . Students may use GenAI in this group assignment. However, it is important to ensure that your assessments are your own original work. In other words, any GenAI content must be correctly acknowledged and referenced . Failure to do that will result in academic misconduct. There are some key considerations to keep in mind before using GenAI:  Currency and accuracy . GenAI can produce content that seems realistic and factual; however, the information can be non-factual, inaccurate, outdated and sometimes false . It is important to use your critical thinking skills to evaluate and fact-check all content from GenAI.  Academic integrity . You need to acknowledge when you have used information from other sources in your work. This includes content from GenAI tools.  Bias and quality . Sometimes content generated by GenAI is generic in nature (as well as potentially false) which may impact the quality of your work. GenAI can also be subject to biases or commercial agendas , which means you don't get the full perspective on a topic. 2

Formatting and final submission instructions Cover sheet and original authorship statement Each report must be accompanied by a completed cover sheet, including the original authorship statement, signed by all team members (see end of this document). Your assessment submission will be processed through Turnitin. Where the teaching staff have concerns about whether you have completed your own work (for example, your document has low editing time, a low version number or does not appear to be prepared by you for any other reason), you may be asked to provide documentation showing the drafting process you have undertaken in reaching your final submission . This process is similar to real-world accounting, where documents showing the preparation of the financial statements, accounting advice to clients, tax advice or the audit report/opinion are commonly referred to as 'working papers' and must be provided to regulatory bodies on request. For students, your working papers for this assignment can include notes, drafts, access to cloud-stored documents in services such as Google Drive or OneDrive, or internet search history related to the assessment task. It is recommended that you retain these notes, drafts, etc. for at least four months after the end of the teaching session (businesses and accountants in Australia are required to keep their working papers for seven years). Failure to be able to provide such material on request from your coordinator, Academic Integrity Officer or Responsible Academic Officer of the university may be used in misconduct allegations against you. Any request will be made to you in writing to your UTS email address. Dispute This group assignment is an opportunity for students to work as a team. Good team work involves effective communication among group members, allocation of tasks and meeting deadlines. To facilitate a good outcome, every group should elect a team leader in their first meeting and discuss issues and set policies (see details on the Group Registration Form) regarding how to proceed with the assignment. Any disputes among members should be worked out, in the first instance, within the group. If the issues cannot be resolved internally, let your tutor know as soon as practicable for assistance. After submission, students who still have concerns over unfair contribution by individual members can fill out a peer review form on Canvas. Report structure The assignment is to be written as a professional consulting report . The report must follow the formatting requirements outlined in the UTS Guide to Writing Assignments . The writing guide can be downloaded here: https://www.uts.edu.au/sites/default/files/2020-02/UTS%20Business%20writing%20guide%202020.pdf Page limits The report should have a maximum length of 15 pages . The structure and relevant page limits of the final report are as follows:  Signed cover sheet (not included in page limit)  Table of contents (not included in page limit)  Executive summary (max. 150 words)—this summarizes what the report found and conclusions. This is different from an essay introduction, which introduces what the report will cover  Introduction—introduces the companies, industry and the context of the report  Main body—includes main text, diagrams, figures and tables, etc., for the five main questions 3

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 Conclusions (max. 200 words)  Reference list (not included in page limit)  Appendices (not included in page limit) Formatting of text  Font: Times New Roman, 12pt  Line spacing: double line-spacing  Margins: At least 2.54 cm for top, bottom, left and right margins Referencing All sources of information must be referenced in the report using the APA referencing style. Details on this style can be found in the writing guide. Further information can be found here: https://www.lib.uts.edu.au/referencing/apa For a guide and example on how to reference GenAI in APA (7 th ) format, visit the Canvas page here . Any source referenced ‘in-text’ must be listed in the reference list at the end of the report. Any report that contravenes the referencing policy may draw severe penalties and be referred to the student misconduct committee. 4

Assignment submission dates 1. Group registration —students to self-sign-up online in their respective tutorial groups on Canvas and complete the Group Registration Form (see end of this document) before emailing to their tutor. 2. Final report —to be submitted through Turnitin by 9:00am Tuesday, 7 May 2024 . Late submissions will incur a 10% penalty of the assignment mark per day. a. Turnitin : The assignment is to be submitted through Turnitin (a plagiarism detection software). This is accessible on Canvas under the Assessments module ( Assessment Task 2 ). Failure to submit through Turnitin will result in a zero mark being awarded. b. Naming your assignment file : Name your assignment file starting with your tutorial number and then group number. For example, if you are in Group 1 of Tutorial 03, then name your assignment file as follows: Tut03_Group1. c. No hard copies are required. d. You can only submit your assignment to Turnitin ONCE . Submission timetable: What Where When Feedback Group registration Complete Group Registration Form Email to your tutor By 11:59 pm Tuesday, 26 March 2024 Final submission (online) Complete final report (with cover sheet) Canvas under the Assessments module By 9:00 am Tuesday, 7 May 2024 Turnitin report; completed marking rubric; report grade Late penalties: Groups that do not conform to the submission timeline will incur the following penalties:  Group registration form—a penalty of 10% of the assignment mark will be deducted if the completed group registration form is not received by your tutor through email by 11:59 pm Tuesday, 26 March 2024.  Final submission online—a penalty of 10% of the mark for every day late, applied to the assignment mark of 20. For example, if you submit your final report at 9:01 am on the due date, the group will receive a 2-mark reduction from the overall mark given for the assignment. The submission time is the time Turnitin records once the document has been uploaded. During peak assessment periods, uploading may take a while to process. Students are, therefore, advised to submit their assignment well in advance of the time due. 5

22320 Accounting for Business Combinations Group Assignment Cover Sheet AUTUMN 2024 Tutor name: Tutorial number: Group name: Date submitted: Assigned companies: Original Authorship Statement We hereby certify that this assignment is our own work, based on our personal study and research and that we have acknowledged all material and sources used in the preparation of this assignment. We also certify that the assignment has not previously been submitted for assessment and that we have not copied in part or whole or otherwise plagiarised the work of other students or authors: Student ID Student Name Signature Date 6

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SUBMISSION CHECKLIST (please read, tick and sign) Final report structure and content  Cover sheet  Table of contents  Executive summary  Short introduction paragraph  Headings used throughout the report  Main conclusions  Reference list and appendices  Large blocks of text have been broken up into paragraphs, with one key idea per paragraph  All statements of fact have been referenced  Minimal use of direct quotes – ideas should be paraphrased in your own words Format  Times New Roman font 12-point  Line spacing double  Margins: at least 2.54 cm for top, bottom, left and right margins Referencing  Number of academic journal articles in reference list___  Number of other sources in reference list____  All direct quotes have page numbers in their in-text reference  All references in text have been included in the final reference list  Final reference list is in alphabetical order by author Turnitin  Report has been checked by all group members before submission—only one submission allowed  Name of student who submitted the report to Turnitin _______________________ 7

22320 Group Assignment: Marks and Feedback Student ID, First name LAST NAME Student ID, First name LAST NAME Student ID, First name LAST NAME Student ID, First name LAST NAME Student ID, First name LAST NAME Marks Class time and tutor: Tutor’s Name, Tutorial Number, Class Time /20 % Marking item Exceeds criteria (Distinction/HD = 75%–100%) Meets criteria (Pass/Credit = 50%–74%) Criteria not yet met (Fail = 0%–49%) Question 1  Provides detailed analysis of the rationales behind the business combination. The reasons provided are convincing and supported by evidence.  Evaluates critically how the share price of the acquiree reacted to the takeover offer by the bidder in comparison to the overall market performance in days around those announcements.  Provides clear inference, with explanation supported by academic literature, on how the price reaction would reflect the underlying economic value of the acquiree.  Provides a clear analysis of the rationales behind the business combination.  Describes the acquiree’s share price reactions to the takeover announcements by the bidder.  Provides valid inference and explanation on how the price reaction would reflect the underlying economic value of the acquiree.  Does not provide adequate analysis of the rationales behind the business combination.  Does not provide adequate evaluation of the acquiree’s share price reactions to the takeover announcements by the bidder.  Does not provide valid inference and explanation on how the price reaction would reflect the underlying economic value of the acquiree. Question 2  Provides a clear, comprehensive, succinct overview of the deal structure and acquisition method chosen. Convincingly justifies why the acquisition method was used with supported evidence.  Correctly identifies the offer price and any subsequent changes. Justifies the offer price through comparison with similar acquisitions. Discusses the impact of choosing cash only, shares only or a combination of both on the financials of the acquiring firm with convincing evidence.  Provides a clear overview of the takeover premium and with clear reasons behind the payment of a premium. What determines premium can be found by reading academic journal articles (valid source).  Provides a clear overview of the deal structure and acquisition method. Provides a valid explanation of why the acquisition method was used.  Correctly identifies the offer price and any subsequent changes. Discusses the offer type in terms of cash only, shares only or a combination of both and attempts to provide some explanations for the choice made.  Provides a clear overview of the takeover premium and some reasons behind the payment of a premium but does not fully identify the relevant academic literature on the issue.  Does not provide a clear overview of the deal structure and acquisition method. Does not provide a valid explanation of why the acquisition method was used.  Does not correctly identify the offer price and any subsequent changes. Limited discussion of the offer type in terms of cash only, shares only or a combination of both.  Incorrectly calculates the takeover premium. Some explanation of the takeover premium is provided with or without reference to a valid source. Question 3  Correctly identifies all different types of intangible assets recorded in the balance sheet of the acquiree.  Provides a clear discussion of the origins of the different types of intangible assets.  Demonstrates a clear understanding of the concept that goodwill only arises from previous acquisitions.  Correctly identifies the different types of intangible assets recorded in the balance sheet of the acquiree.  Adequate discussion of the origins of the different types of intangible assets.  Some understanding of the concept that goodwill only arises from previous acquisitions.  Incorrectly identifies the different types of intangible assets recorded in the balance sheet of the acquiree.  Inadequate discussion of the origins of the different types of intangible assets.  Invalid understanding of the concept that goodwill only arises from previous acquisitions. Question 4  Correctly identifies the goodwill/bargain purchase arising from the acquisition.  Correctly identifies the goodwill/bargain purchase arising from the acquisition.  Incorrectly identifies the goodwill/bargain purchase arising from the acquisition. 8

 Provides a clear acquisition analysis with details supported by the relevant information from the proforma or post-acquisition financial reports.  Provides a clear discussion of any significant discrepancy between fair value and carrying amount of the assets and liabilities acquired, paying particular attention to intangible assets and goodwill.  Provides an adequate acquisition analysis.  Adequate discussion of significant discrepancy between fair value and carrying amount of the assets and liabilities acquired.  Provides an inadequate acquisition analysis.  Invalid discussion of significant discrepancy between fair value and carrying amount of the assets and liabilities acquired. Question 5  Provides clear explanations of each of the provisions included.  Demonstrates a clear understanding of the rationale behind each of the provisions specified in the deed.  Provides some valid explanation and justification for each of the provisions included.  Does not provide valid explanations or justification for each of the provisions included. Use of references  Demonstrates deep engagement with relevant accounting standards (if any) and academic sources in developing discussion and providing evidence throughout the report.  Uses relevant accounting standards (if any) and academic sources to support main points of discussion through some parts of the report.  Does not refer to relevant accounting standards (if any) and academic sources or only engage with them superficially. Written communication  Communication is clear, concise and precise, with all sections integrated into a coherent report. Report is very well written, structured, and presented in a professional and coherent manner. Excellent use of visual material that is well integrated with text. Minimal grammar/spelling/punctuation errors. The formatting, referencing and maximum page limit is strictly adhered to.  Communication is generally clear and concise, with some integration between the report sections. Report is well written, structured, and presented in a professional and coherent manner. Good use of visual material to support text. Some grammar/spelling/ punctuation errors. The formatting, referencing and maximum page limit is mostly adhered to (up to 1 page over max page limit).  Communication of report is unclear, making it difficult for the reader to understand the ideas being presented. This may be the result of imprecise language, confusing use of diagrams or poor structure. Minimal integration between sections. Presentation may appear unprofessional or unfinished. Many grammar/spelling/ punctuation errors. The formatting, referencing or maximum page limit is not adhered to (more than 1 page over max page limit). Additional comments: 9

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