US-CN Companies & Securities Law Assignment

1. Describe the meaning of ‘insolvency’ with regards to companies. Section 95A of the Corporations Act 2001 (the Corporations Act) provides a definition of solvent and insolvent with reference to a person, but the definition can be extended to a company, which is considered a legal person: (1) A person is solvent if, and only if, the person is able to pay all the person’s debts, as and when they become due and payable. (2) A person who is not solvent is insolvent. 2. Briefly describe the procedures through which the Corporations Act attempts to avoid liquidation of companies if possible. The main intention of the Corporations Act 2001 is to treat liquidation as a last resort. The Corporations Act 2001 provides extensive guidance on the rights of members and creditors whenever it is decided that the life of the company is in danger of drawing to a close due to financial difficulties. The Corporations Act also attempts to avoid the liquidation or winding up (these terms c...

Exercise 27.1 Acquisition analysis, acquisition date entries On 1 July 2019, Christina Ltd acquired all the issued shares of Adeline Ltd, paying $120 000 cash and transferring 100 000 of its own shares to Adeline Ltd’s former shareholders. At that date, the financial statements of Adeline Ltd showed the following information. All the assets and liabilities of Adeline Ltd were recorded at amounts equal to their fair values at the acquisition date. The fair value of Christina Ltd’s shares at acquisition date was $2 per share. Christina Ltd incurred $30 000 in acquisition‐related costs that included $5000 as share issue costs. Required 1.Prepare the acquisition analysis at 1 July 2019. 2.Prepare the journal entries for Christina Ltd to recognise the investment in Adeline Ltd at 1 July 2019. 3.Prepare the consolidation worksheet entries for Christina Ltd’s group at 1 July 2019. 1. Acquisition analysis at 1 July 2019: Net fair value of identifiable assets and liabilitie...