Hello Mike!
I'm having difficulty understanding the requirement for this question. Could you help me out?
"The director of Samat Ltd. proposes to set up a company, Diamond to enable the company to conduct online trading business. Samat intends to put $3 mil in Diamond. They money will be invested in specialised products. A manager will be employed to take charge of the trading business and will own all the share capital of Diamond.
The manager will be paid a fixed remuneration and will be prohibited from obtaining access to the products for his personal benefit.
Samat will obtain 95% of the profit and absorb 100% of all Diamond's losses. An annual transfer of the profit/ loss will occur on 31 Dec and the capital will be returned to Samat in four years time."
Discuss whether Diamond should be consolidated.
Many thanks!
I'm having difficulty understanding the requirement for this question. Could you help me out?
"The director of Samat Ltd. proposes to set up a company, Diamond to enable the company to conduct online trading business. Samat intends to put $3 mil in Diamond. They money will be invested in specialised products. A manager will be employed to take charge of the trading business and will own all the share capital of Diamond.
The manager will be paid a fixed remuneration and will be prohibited from obtaining access to the products for his personal benefit.
Samat will obtain 95% of the profit and absorb 100% of all Diamond's losses. An annual transfer of the profit/ loss will occur on 31 Dec and the capital will be returned to Samat in four years time."
Discuss whether Diamond should be consolidated.
Many thanks!
