Accounting for subsidiary & Associates

Well surely the interesting thing about Kata is that it has virtually no trading assets, no receivables, no (little) inventory, no payables - it's presumable non-trading (what's it doing with 1,000 inventory?) It would be interesting to know who owns the other 55% - it would be a strange investment for "the man in the street" You could see how the inclusion of Kata as a subsidiary would affect group borrowing / gearing ratios Do we know why Bolo paid $3 million for a non-controlling interest in a company that was only worth $2.4 million - that's $3 million out for the acquisition of $1,08 million assets. One hell of a premium on acquisition. Also interesting to see how Kata has moved from having a worth of $2.4 million to net assets of $3 million if it's not a trading entity Nothing else is leaping out of the page at me - for future reference, I'm not inclined to do your homework for you - it's not me that should be trying to impress your tutor!

If Kata's business was to provide a service, for which immediate payment from the customer is required upon completion, is it conceivable that the balance sheet would show no trading assets, even though they are trading?

The word "trade" implies buying and selling If it were a service provider, the more correct expression would be "operating" rather than "trading" But I suppose you're right - it it is a service provider, that could fit the scenario. But no cash? No bank? Still looks very fishy to me

Thanks for explaining that, I hadn't appreciated the distinction between trading and operating. I agree, it looks very fishy to me with no cash or bank. I wouldn't buy it.... well, I don't have the money to!

Well, there's certainly something going on when Bolo pays $3 million for a 45% holding of $2.4 million. Money laundering?

Yes, I'd be on the phone to trading standards straight away, if it wasn't all just hypothetical!

Too late - they already know - I told them!