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1. i do not get the the answer sheet where they calculate the profit or loss account again to exclude the exceptional items.
that means only taxable items are shown in profit or loss account ?
2. then where do we show the exceptional items ? since it is also an expense and must be deducted from revenue ?
3. when answer sheet calculate the new profit or loss account under P/E ratios, where can i find 2248000 and 350000 in the question ? it seems that those figures are not shown in the question
4. (b), this may be off the topic but, usually when a company A purchases company B, company can give their own shares and cash to purchase B ? i mean giving both shares of company A as well as cash.
5. Moreover, in part (B), can i say that different shareholders will be given with different consideration ? maybe venture capital may be given shares while senior managers may be given with cash.
6. In addition, when Stanzial Inc wants to purcahse Besserlot Co, do Stanzial must consider the interest of all shareholders of Besserlot ? or just those with the highest shareholding to acquire over 50%.
Because i know that we can’t ignore the minority shareholders. However Stanzial INC do not have that much capital to satisfy interest of all shareholders.
Therefore Stanzial must take into consideration of all shareholders of Besserlot ? or just focus some and ignoring minority shareholders ?
7. lastly, question have provided us both 20×6 and 20×5, if question provides us with 2 years, don’t we suppose to calculate both 20×6 and 20×5 of profit or loss account ?
1 & 2 Excluding the exception item has nothing to do with whether or not it was tax allowable. It is because it is assumed to be a one-off expense, therefore will not be repeated, and is therefore not relevant to future expectations.
3 22,480 is given in the question – it is the turnover for 2006. The first paragraph of the question says that turnover will increase by 25% per year.
I can only assume that the 350,000 you refer to is the interest in 2007 – the question says in note (iv) that interest (280 in 2006) increases at the same rate as the turnover (25%).4 Of course – that is the most common way of paying for an acquisition!
5. All shareholders will be treated the same way.
6. Why should Stanzial consider the interests of Besserlot’s shareholders? All they are interest in is how much they can afford to offer, and the minimum B’s shareholders are likely to be prepared to accept. All of this is dealt with in my lectures (and those on this topic for Paper FM (old Paper F9).
Company’s don’t pay for the acquisition with capital!! They either pay cash, or they issue new shares, or a combination of the two.7. Why would you want to do this – the question gives you the SOPL’s for 2005 and 2006!!!
I have asked you before, but you have not answered me, and so I ask again:
What studying did you do before you started looking at past exam questions, or are you trying to learn by looking at the answers to questions in your Revision Kit?
actually i have listened to full time classes but it’s been last year however due to family matters i couldn’t go for exam. After that, i did take some time to see your lecture notes and video lecturers however with full time job, it’s a bit hard for me to do everything with solving all revision questions and watching video lecturers
i’m really sorry for asking alot of questions john
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