Answer To: Accounting Financial ACC701 Individual Assignment Due Week 9, submit on Turnitin Question In recent...
Sarabjeet answered on Sep 05 2020
Accounting Financial
KING’S OWN INSTITUTE*
Success in Higher Education
INDIVIDUAL ASSIGNMENT COVERSHEET
Family Name: Nankani
Given Name: Siddharth
Student Number: 11800307
Lecturer’s Name: Andrew Chew
Subject Name: Financial Accounting
Assignment Title: Causes of Liquidation of Buechip Companies
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Siddharth
12
09
18
Signature
Date
Executive Summary
Liquidation is a process which starts when companies’ directors propose the liquidation to companies’ shareholders, and shareholders approve this and company collapse. In this study, the large companies like ABC Learning, HIH Insurance Company, and One Tel Company, survivors of liquidation and all three companies are gone through liquidation because of various reasons. Therefore, due to the grim situation of the market, the company cannot able to survive in the market.
Contents
Introduction 2
The events that led up to the liquidation 2
ABC Learning Center 2
HIH Insurance 3
One Tel Phone Company 4
Discussion 5
APES 110 Code of Ethics for Professional Accountants 5
5 codes of ethics 6
Findings 6
Listing Rules governing listed companies in terms of corporate governance 6
Liabilities a major factor contributing to the liquidation of individual companies 8
Conclusion and Recommendations 9
References 11
Introduction
Every business agrees that they definitely prosper their whole business in the coming years. According to the accounting principles, several businesses that are already started should follow the basic assumptions of business accounting, and according to the basic assumptions, the business must follow the “continuous attention” assumption that each company will be running long. However, according to business barriers as well as practical problems, no company can survive for a long time. There are several issues, such as non-payment of debts, non-compliance with GAAP, lack of interest in an existing business, highly competitive markets, and various other practical concerns or reasons. Therefore, for these major reasons, the firm either liquidates or goes for completely wind up. As of now, it is not a big deal for companies to liquidate because they want to make a profit. If they can't generate fixed costs, they will go for a company to liquidate or to wind up the business.
The events that led up to the liquidation
ABC Learning Center
Status: ABC learning center is Australia's largest child healthcare providers, handling 12,000 childcare centers in Austria and serving more than 110,000 children. At the beginning of the 19 months before the company’s starts, many shareholders stakes.
Issues Created: According to 2007 and in 2008 financial reports, ABC Learning Company has increased its current asset per dollar cash liability to 30 cents and 40 cents, indicating that the company is indeed in potential flow during these years. The crisis was still in operation but the company has been operating for a few years. In addition, according to the report, the company’s debt on that date was $1.9 billion. But ABC has no assets to sell as well as to recover a debt (ABC Learning Centres on the brink of collapse - SmartCompany, 2008).
Resultants: ABC’s creditors simply proposed to sell the Australian business as well as stay in other group firms, however later unable to continue operating due to huge debts, the creditors agreed to end the group's 39 companies and recover their debts and so. The company entered management and bankruptcy management in 2008. Australian taxpayers proposed not to liquidate because the taxpayer paid about $60 million, therefore ABC Learning Center remain open, but creditors did not agree on the terms (Barbeler, 2010).
HIH Insurance
Status: HIH insurance is an integrated insurance company in Australia. CEO Ray Williams recently succumbed to the company with the highest reputation in 1968, which is currently the most growing policyholder. Before the liquidation, the company had about. Market share accounts for 13% of total revenue, and market share accounts for 15% of total assets.
Issues Faced: March 15th. In 2001, the APRA has noted that the company has appointed a liquidator; they applied to court for temporary liquidation for the following reasons:
The company estimates that in Australia's total balance sheet total of a$7 billion in balance sheets, assets and liabilities exceed $5 billion in liabilities (HIH Insurance in Liquidation, S&P Withdraws Ratings, 2001). The Royal Commission tracked the company for almost 18 months to recover and more than $50 million in costs; according to the judicial company that is reviewing the...