QUESTION
In each of the following independent situations, discuss with reference to AASB 10 Consolidated Financial Statements (Appendix B, paragraphs B2 and B3) whether a parent-subsidiary relationship exists and which entity, if any, is a parent required to prepare consolidated financial statements.
(a) Albany Ltd and Busselton Ltd each hold 50% of the shares in Dunsborough Ltd, all companies being involved in the computer software industry. Albany Ltd agrees that Busselton Ltd should provide the management of Dunsborough Ltd because of the expertise provided by its managing director, Bob Gates. Busselton Ltd receives a management fee for providing its expertise. (limit 250 words)
(b) Alice Ltd has recently acquired a 35% interest in Springs Ltd, a company that has discovered large deposits of iron ore. Alice Ltd has extensive experience in the mining industry and, as a result, has been able to have four of its directors elected to the board of Springs Ltd, which has six directors in total. (limit 250 words)
(c) Darwin Ltd holds 30% of the shares issued by Arnhem Ltd. The other shareholders come from mixed backgrounds, but each holds on average 10% of shares in Arnhem Ltd. There are seven directors of Arnhem Ltd. Four of these are appointed by Darwin Ltd. The other three directors are appointed by three of the other shareholders who have an interest in the management of the company. Most of the remaining shareholders live outside Australia and rarely attend board meetings of Arnhem Ltd unless they have business to attend to in Australia around the same time as the board meetings are held. (limit 250 words)
SOLUTION
(a). In this case both the companies hold equal percent of shares in Dunsborough. The issues of regulation of accounting became an issue of concern and discussion, specifically following the economic crisis and crash of the year 1920-30s that headed to for the accounting theory and principles defined. The main aim of accounting is to offer details and detail to the involved parties, who might not have contact to full or partial, but required economic decision. Due to their information disadvantage, they are irregularity in the working and use of information. However, the regulation of accounting is seen as relating to “sustained and focused control exercised by a public agency over activities valued by a community” (Baldwin, Cave, 1999), there are other outlooks. Accounting policy in Australia a requirement, but it is over-rated and the main reason of this over-rate is that government is the ultimate monopoly (Baker, 2005. The impact of this governmental monopoly on the law-making procedure is to manage that what is produced and the ways of distribution of consequential production within the societies. The governments driven environments that are not checked properly are ever an expanding perpetual-motion machine. Any administration is rapidly confined by special-interest units such as the receivers of the regulation, the minister and their staff who are keen to keep that portfolio and make it influential; the departmental employees, who run the regulation and wish to make it “better” and non beneficiaries who do not want to be excluded.
(b). All the departments of the government must have a rigid, declining, regulatory budget – measured both by quantum and pressure of regulation. Any organization (Majone, 1996), which goes over the budget of the government, is likely to be banned from launching new regulations until they find old regulations to remove. The yearly budget for each section would lead to a decline in the overall regulatory burden each year (R v London County Council).
This policy is not normally understood to be a part of the common law, and so a law continues in force, until canceled by parliament, although long the time may have been since it was known to have been actually imposed. There is though some model for the principle, and at times the Latin maxim “jus incognitum” or “unknown rule” has been used to change down unclear and outdated rules by the courts. Developing the principle of desuetude would give the prosecutors the methods to strike down old, the legislation that is not used as no longer law – of course, the regulations for this must be a bit restricted, so that objector moderators cannot use the approaches to hit down legislation only as they do not like it. There is complete awareness of the irony that with a motive of enabling this policy to be launched, a new rule of Parliament would have to be issued. Regulation Impact Statements must be a necessary procedure, which allows a real method of the expenses and advantages of regulation. Regulations that do not able to clear the test must be submitted back to Parliament or the related Minister.
(c). The economic method to manage is constant with the theory of public choice that focuses on the limit to which the behavior of government is meant by imagining all performers as balanced entity maximizers of their own welfare. Analysis is led to the challenging methods (Peltzman, 1979) of the entities included– how they get across the regulatory that aims for adding their own aims. As a result, private interests are served in spite of the the common interest. Public selection theory settles the questions related to politics and economics. It depends on the neo-classical monetary expectations of rational selection, which is also known as self interest to guess the behavior of politicians, who are also called as the regulators. These politicians only pass those regulations that allow their scope of reelection which, as discussed in the section above, will head the politicians to those that have the methods to add this goal.
The current stage of the economic cycle surely mentions that country is going to see more companies in difficulty, many other issues from clients regarding investments, and more criticisms basically about revelation, suggestions and tricks. Actually, the standards of corporate governance basically have been set as a standard by many of the trading partners of country. Regardless of the fact that the nation does not believe that these subsides show a systemic failure of governance, also not a return to some of the endemic features of 1980s. There has been public discussion latest surrounding the correctness of the “unitary board” corporate governance model.
REFERENCES:
“R v London County Council”; Ex parte Entertainments Protection Assn Ltd , 1931 2 KB 215
Baldwin, R & M Cave, 1999, “Understanding Regulation, Theory, Strategy and Practice, Oxford”, Oxford University Press
Baker, C .R., 2005, “What is the meaning of ‘the public interest’ Examining the ideology of the American accounting profession”, Accounting, Auditing and Accountability Journal, v 18, pp 690-703
Majone, G., 1996, “Regulating Europe, London, Routledge”
Peltzman, S., 1979, “Toward a More General Theory of Regulation”, Journal of Law and Economics, v 19, pp 211-240
L029
But you can order it from our service and receive complete high-quality custom paper. Our service offers Accounting essay sample that was written by professional writer. If you like one, you have an opportunity to buy a similar paper. Any of the academic papers will be written from scratch, according to all customers’ specifications, expectations and highest standards.”
