Assuming CONVEX Ltd acquire 75% of CONCAVE Ltd, How will you treat the followings? (a)Within the year, CONVEX Ltd. sold pharmaceutical products worth $8 million to CONCAVE Ltd. CONVEX Ltd. made a margin of 20% on these sales. CONCAVE Ltd. has sold 60% of these products to external parties by the end of the year. (b) Within the year, CONCAVE Ltd. acquired land for $50,000 and sold it to CONVEX Ltd. for $55,000. CONVEX Ltd. is in possession of the land as at the end of the year. (c) CONVEX Ltd. is planning to sell 30% of their shares to another company who wants to support local production of the vaccine. How will this transaction affects the preparation of CONVEX Ltd. financial statements for the next accounting period? (d) Assuming you have done the financial ratio analysis and you have realized that profitability is looking good but liquidity is not impressive and needs urgent attention. What do you think could be the problem with CONCAVE Ltd. that your company needs to help them address
Questions
Assuming CONVEX Ltd acquire 75% of CONCAVE Ltd, How will you treat the followings?
(a)Within the year, CONVEX Ltd. sold pharmaceutical products worth $8 million to CONCAVE Ltd. CONVEX Ltd. made a margin of 20% on these sales. CONCAVE Ltd. has sold 60% of these products to external parties by the end of the year.
(b) Within the year, CONCAVE Ltd. acquired land for $50,000 and sold it to CONVEX Ltd. for $55,000. CONVEX Ltd. is in possession of the land as at the end of the year.
(c) CONVEX Ltd. is planning to sell 30% of their shares to another company who wants to support local production of the vaccine. How will this transaction affects the preparation of CONVEX Ltd. financial statements for the next accounting period?
(d) Assuming you have done the financial ratio analysis and you have realized that profitability is looking good but liquidity is not impressive and needs urgent attention. What do you think could be the problem with CONCAVE Ltd. that your company needs to help them address?
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